Altcoin Daily: Raoul Pal’s Crypto Forecast AFTER The Bitcoin Halving 2024 (The NEXT Solana)

0:01Picture yourself on a beach, retired early and enjoying financial freedom. If this is your dream, then now's the time to level up your investing game and Real Vision can help you. We arm you with the knowledge, the tools and the network to succeed on your financial journey on your own terms. Take control of your future and visit realvision.com forward slash free. That's realvision.com forward slash free. Crypto is growing at twice the speed of the Internet in terms of adoption. Today I interview global macro investor Raul Pal. It's the fastest adoption of any technology and any asset class the world has ever seen.

0:42About his forecast for the crypto market in 2024. Well, crypto gets to a billion people by the end of next year. A billion active wallets. And it gets to 4 billion by 2030. We discuss the Bitcoin halving. The day of the Bitcoin halving. What should they expect? His Bitcoin price prediction by end of year? for this cycle, how high range-wise do you see Bitcoin going? What altcoin is the next Solana? The biggest game in town, however, is what is the Solana of this cycle? And watch the whole interview because Raul Pal ranks the crypto market. No, I'm going to put Doge in A. Really? Click the like button and let's start, Raul, with where is crypto today?

1:24You know, I've always been talking about this. I think the last time I spoke to you, talked about this. There's a lovely transition that makes it easy for people to understand. Crypto is the best performing asset in the world for three years, and then it's the worst for one year. That first year is known as crypto spring. Sometimes it can be a bit choppy. It could be like spring. Some days it rains, some days it's sunny. But every day it gets a bit warmer. We had a pretty decent crypto spring. I mean, Bitcoin was up 150%. Then we started and we're in the process of transitioning to crypto summer.

1:57And crypto summer is when you start hitting all-time highs and things start going bananas. And we're very close to that now. We've got to the all-time high in Bitcoin and we've been messing around. So whether by the time this video comes out or not, it's broken out or it hasn't, we don't know. It doesn't really matter. It's pretty standard to have a chop around for a bit. And then fireworks happen. And really, the fireworks truly happen when altcoin season comes. And that comes in crypto summer. And we're starting to see the first signs of that. It's been meme coin season for a while now. And I think it will drag the big memes like Doge up.

2:42And before you know it, even everybody, I find it amusing, everybody is writing off Ethereum right now. And exactly the same happened in 2020. In 2020, Ethereum was underperforming Bitcoin in spring, as it always does. Then it started basing. And then by the end of the year, it just never stopped outperforming. And I think we're in a similar kind of pattern. And that's typical of altcoin season. Let's talk about ETH. Let's talk about Solana. but this video is definitely coming out before the Bitcoin halving. So especially for new people just entered the space in the last six months, the day of the Bitcoin halving, what should they expect?

3:22Nothing. It's a coin flip between it going up and it going down. But what we do know is the supply of Bitcoin from the miners will halve. So over time, there's less new supply. and therefore the supply has to be met by existing participants selling. Now, considering about 60 % to 80 % of all Bitcoin holders don't sell, they just hold, there's actually quite limited supply around. So when you add in a kind of macro bull market, it tends to then tilt the supply-demand imbalance wildly in favor of demand. Not enough supply, too much demand. Add the ETF in and that adds more FOMO. It's easier for people to get in.

4:05And before you know it, you start building this banana zone cycle. So the halving itself is a non-event. It's really, it's the signal that you're about to come into crypto summer, which happens to coincide with the presidential election years every time. And it also corresponds with what I call the everything code cycle, which is the debt refinancing cycle, which is the macro cycle. They're all the same thing. So you get this kind of powerful dynamic of politicians giving out free candy because they're going into an election, stimulus. You tend to have a liquidity cycle because of the business cycle, because they have to refinance the debts of the governments.

4:44And you tend to have the Bitcoin halving, which is a reduction in supply. And that's why these periods get really quite exciting. If slash when the Federal Reserve cuts rates for the first time in years later this year, what will that mean for crypto? I think it's been anticipated by the markets. But it just at top level, if you think of most people who've got credit card debts or mortgages or interest payments on cars, it just makes everybody's life a little bit easier. And if you've got a little bit more discretionary spending, you might be able to put it into the market. And so at the margin, it'll help.

5:27I mean, obviously, it would help a lot if rates went down to 2%. Are they going to get there or not? Certainly not this year. Maybe next year. Depends what happens to inflation. Depends what happens on a number of different levels. But really, it's not interest rates that actually drive the world. It's liquidity. Liquidity is the money that the central banks put into the system, often in conjunction with the government to try and generate economic growth or drive markets. And we bottomed in liquidity, I think, again, last time we spoke, back in November 2022, that was the bottom of the liquidity cycle, happened to be the bottom of the crypto cycle and bottom of technology, because those are the forward-looking asset classes.

6:12And going forward, my work suggests that liquidity should continue to ease all the way into 2025. So therefore, if we've got rising liquidity against this backdrop, it should be positive. And by the way, to your credit, the last time I had you on or back in end of 2022, I asked you, are you worried about a recession coming? And you said the recession's now. People are the most depressed now. They'll only get better. And you turned out to be right to your credit. So I want to go forward thinking, maybe in a longer time span, are you in the Michael Saylor camp that Bitcoin will most likely hit a million dollars?

6:51Yeah. So how I back this out is two different ways. One, I just look at the log chart of Bitcoin. That trend, you can extrapolate it, and somewhere around 2030, it'll be a million dollars. That sounds as ridiculous today as it did when I first bought it at$200 and I put a price projection of$100 ,000. I said it's actually going to a million, but I'm going to discount myself for being an idiot by 90%. So it costs$200. It could go to zero at that time, certainly, because that was 2013. But my price projections, 100 ,000. And people said, this is ridiculous. I said, it's the best macro trade of all time.

7:30So the million dollars doesn't seem that preposterous. the other way I back it out is when I look at the adoption of cryptocurrency so you use as a proxy the number of active wallets now we all know that's not a perfect proxy because people have multiple wallets but you compare that to IP addresses for the internet start them at both 5 million now people have multiple IP addresses as well so it's very similar it's just directionally gives you an idea. Crypto is growing at twice the speed of the internet in terms of adoption. So it's the fastest adoption of any technology and any asset class the world has ever seen.

8:11So if we just assume that growth slows, as it did with the internet, because once you get bigger and bigger numbers, it's hard to grow at such a rate. So it goes from, let's say, 175 % a year where it's been trending and goes to 43 % a year, which is what the internet did from year eight onwards. Well, crypto gets to a billion people by the end of next year. A billion active wallets. And it gets to 4 billion by 2030. Well, at 4 billion, the price will certainly be a million dollars. So it kind of backs out from the adoption of the technology and of the log chart, because the log chart basically is the adoption of the technology.

8:50Hey, everyone. We're going to take a quick pause and hear a word from our partners. We'll be right back. Hi, you. Hey, listen. If you're enjoying this, come and see me on the YouTube channel, Raoul Pal, The Journeyman. Sign up there, get everything I ever do. See you there. Your favorite neighborhood spot grows with Square. Indeed, my favorite neighborhood spot has quickly become Todd Snyder in Williamsburg. Todd Snyder is one of my favorite menswear shops and has supplied me with all the clothes I have needed this quite hot summer. Every business has different goals, but Square is the business platform that supports them all.

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10:04For this cycle, this is a question just for fun. How high range-wise do you see Bitcoin going? It's difficult to know what kind of cycle we're going to be dealing with. There's a school of thought that says this is a left translated cycle, which means it goes up fast early and then peaks early. Most would finish in 2025 in December. That's normally how these crypto cycles have finished. That third year would be the December, November kind of period. So could it come earlier and peter out this year? There's definitely a probability of that. What price would that be? I would say 200 ,000, something like that.

10:51And that would be, okay, that's gone very far, very fast. The most likely outcome is a standard bull market. Now, the last one we had, 2020, 2021, was actually a stunted cycle because really the final leg never happened. We had a huge final leg in 2017 and an even more enormous one in 2013. But last time around, we didn't get one, which caught everybody off surprise, including myself. So somewhere that would be, you know, Bitcoin gets to, let's say, 200 to 250 ,000 peaks somewhere between the summer and the end of the year. OK, that seems pretty reasonable. The other probability is that we have a full bubble cycle because now there's more access to it by the ETFs.

11:44There's more acceptance. There's more regulatory acceptance. It captures more mindshare. There's like 110 million Coinbase wallets and only about 10 million are active right now. So that number can go up dramatically. So we can see a huge participation and a final kind of belief that this is it. That could happen. And in which case, then you'd see an extension to maybe 400 ,000 plus in this cycle. But I would give the short cycle and the bubble cycle roughly the same probabilities. I'm probably more earning towards the bubble cycle, but let's call them both 20 % probability and 60 % for something normal.

12:29And in terms of when altcoin season starts, let me pitch this to you. Or is this when, is it when, you know, there's a wealth effect in crypto and Bitcoin. Bitcoin's hitting all-time highs. People feel wealthier. It spreads into altcoins. Is that when it starts? Yes. And it typically starts when one of the other big layer ones starts hitting all-time highs as well. So now everybody's celebrating in the party. And everything starts getting recycled down the risk curve. Because now you're going, well, Bitcoin's up 70 ,000 or 80 ,000, and maybe it only gets to 150. So I'm only going to make 100%.

13:07I mean, in normal markets, these are crazy numbers. But in crypto, it's like only 100%. It's not worth it. So you start looking for where am I going to make five times or 10 times or 20 times. And that's when people go out the risk curve, and it starts getting crazy and stupid stuff happens and people may make it and lose fortunes. I try and navigate it by, you know, I use this expression, don't fuck this up. And really, it's because this altcoin season really has a tendency for everybody to screw up because they suddenly get the FOMO. They can't see straight. They want to use leverage. They want to make as much money as possible.

13:44They start going really far out the risk curve with all of their portfolio. They start custodian and stupid exchanges they should never do or putting money into DeFi things that they should never be involved in. And before you know it, it all goes wrong. So my advice is always, look, put 90 % of your assets in these core crypto. Call it brief and have the three biggest ones with proven network effects are Bitcoin, Ethereum, Solana. And think of that as a risk curve. Bitcoin, the least risky, Solana, more risky. It's earlier in its adoption. It should outperform, all things being equal. And then you can have 10 % where you can do all the stupid shit and try and make your 100x.

14:24That will end up being your wallet of shame. You'll have a bunch of stuff that goes to zero in there that you never get rid of. But you can't do yourself damage if it's only 10%. And if you get it right, great. You're going to add another 100 % onto your portfolio, but you can't mess it up by doing it. So enjoy altcoin season. Realize that it should move ETH and Solana more. So you should get some really good returns out of that. But don't overextend yourself when you go too far out the risk curve. What is your investor's thesis for ETH this year? Given this is an institutional cycle, people like Bitcoin now, but ETH?

15:05So if Bitcoin is the gateway drug, the RAAs, everybody else, you can kind of get your dad across the line with Bitcoin. and you can just use digital gold or store of value or something pretty straightforward. ETH really is the settlement layer for all of the layer twos, but also I think a lot of the financial services industry will build on top of it because it's deemed to be the safe bet. It's like using Salesforce for your CRM and other stuff. It's like using AWS, right? It's the thing you don't get fired for. Now, I think Solana will grab part of that market because of Fired Answer, which is much faster.

15:48We can talk about that later. But generally speaking, ETH is the easy choice. It's like you work for a large corporation, they'll give you Microsoft Office. ETH is Microsoft Office. Interesting. Okay. So you think ETH's the safer play, but Solana's the easier play. So if you could, Solana and ETH, for this cycle, what are your thoughts? Well, the proof is in the pudding. I'm 90 % Solana. That's been my big bet for this cycle. So last cycle, my bet was switching Bitcoin into ETH a little bit later in the cycle after the bottoming of that Bitcoin ETH cross. And that really paid off because it massively outperformed.

16:34And this cycle, I switched my ETH into Solana last year, about August. And that really, really paid off and i think it continues and so fire dancer yeah the biggest game in town however is what is the solana of this cycle if you remember solana last cycle was huge so was avalanche so was polygon there was a few of them that really got the narrative and it really solana won out that as the next big thing the others are still fine they've got activity and stuff going on, but not the scale of Solana. The question is, what is that one of this cycle? Because you can make some real money in that bet.

17:16But this is where people start going too far at the risk of, you really need to see what is getting some real adoption and a real narrative and real developers working around it and stuff like that. That remains to be seen, but that game is still to be played. So I actually was going to ask you this, besides the ETH ecosystem, besides the Solana ecosystem, what is an other ecosystem on your radar? And for example, oh, go on, sorry. There's two. Please. One, as a caveat, I set on the foundation for SWE, which is an incredible project. That and Aptos are both move-based. SWE kind of rewrote the whole thing from scratch and have built other stuff around it.

18:02But those, I think, you're starting to see other people, Chris Benisky, Meltem Demiris, talking about EVM, SVM, MVM. And I think that's probably right. So those are on my radar screen. Obviously, I'm on the foundation, so I'm somewhat biased. But I see behind the curtain the amount of activity and who they talk to and how it talks. The other one is the Cosmos ecosystem. so celestia would be the obvious one there there's a few others within that ecosystem um and that is a those are the two ecosystems that look like okay what is the next big layer one um ecosystem it's one of those two i think unless something else randomly comes out of nowhere we just did a dedicated uh video for the sui and sui in general and the sui ecosystem So a lot of things to like.

18:58They have a killer team. So I definitely understand. Yeah. Yeah, they really are super high quality people. I mean, I'm blown away by them. So we'll see. The Bitcoin ecosystem. You're an NFT guy. Doesn't have to be for NFTs. But in general, is that a viable ecosystem you're looking at? I don't use my judgment because what do I know? I just look at the people being involved in it. I'm seeing more venture capital. And I'm seeing the Bitcoin maximists getting kind of pushed into less relevance by people who want to build the more open, interesting, useful Bitcoin ecosystem. We're seeing incredible activity in ordinals.

19:46There is going to be some other layer twos. I think there'll be Bitcoin meme coins, which will really piss off the maxis. But I think Bitcoin really needed this because it needed other types of activity. So I think it's good. I think it's very positive. And the people I respect and trust, whether it's hedge funds I invest in or whether it's other people in the space and VCs, they're all saying, listen, you've got to focus here. I'm not really focused on it, but I think it's a very valid thesis. And it's early. And it is early. For Solana, you mentioned Fire Dancer. For the folks at home, could you explain what that is?

20:32So Fire Dancer is basically a validator of Solana. It's in Testnet right now. It's basically another way of accessing the Solana network. It was built by Jump Trading, which is a high frequency trading firm that's deep into crypto. And they built it to be fast enough for high frequency trading. High frequency trading is basically limited. So the game in high frequency trading is to be the fastest with seeing the order flow and putting your orders in. That uses massive fiber optic cables of the shortest possible length, because what they're using is the speed of light. So they say, well, it's impossible to do that in Ethereum or Solana or anything.

21:21So you need something that operates at a quantum change, a step change in speed. So they built a new version of Solana, which will run, which you can choose as your validator. If Solana's theoretical transactions per second is 65 ,000, this is theoretically 1 million so it's like it's a it's an entire game change so what does that enable why am i interested in it because things like some of the two initiatives from solana one was compressed nfts allow you to create a million nfts for 100 bucks we're seeing that on layer twos as well like base but we're not at layer one level okay solana's a whole different game.

22:09So that makes it very cheap. So you can use NFTs for other things, not high-end art or stuff. You can use it for tickets or whatever, high-frequency stuff. Now, if you've got a chain that operates at the speed of financial markets, well, now you can tokenize exchanges. You can put exchanges on the blockchain like NASDAQ. Okay, that gets really interesting. Now, This tech stack's not ready. It won't be this cycle. But we'll see people using this new speed and low latency for interesting stuff. And it'll build a narrative. Next cycle, we'll see the launch of stuff on it. So that's how I think about this.

22:47This is like we've just unleashed two superpowers. And we will start to see people experimenting with it and the narrative building. Next cycle, we'll actually see projects coming out on it. But it is a game changer for the entire crypto space. And most people aren't aware of it yet. Hey, everyone. We're going to take another quick break and hear a word from our partners. We'll be right back. All of us together are living through the death of an old world and the birth of a new one. This is a fourth turning, but this is not the fourth turning of demographics or politics. This is the birth of the new technological age.

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24:43I saw this thing on Twitter a week or two ago. Maybe you did that. Maybe it was FUD. I don't know. But like 70 % of all transactions on Solana fail or something like that. Have you seen that? And does this solve it? So, no, it doesn't solve that. Right now, the network's overwhelmed because of massive use, because meme coins and other stuff. And we've seen this in ETH in the past as well. where it just gets overwhelmed with activity. So they're putting through fixes now to increase the bandwidth, essentially, the ability to deal with all of the transactions that need to happen. I think the TPS is basically the speed and number of transactions without it getting clogged.

25:29But you need compute power behind it as well. So, yes, we've seen Solana transactions failing right now, only because of the sheer demands of the network, Much like you can overrun a broadband network or a mobile phone network. It's all the same thing. And so what you need is more compute. So you need more compute, a few fixes, make things a bit faster. So it's not broken per se. It's just being tested to its limits, which I actually think is very bullish, particularly if they put a decent patch through. And before you know it, it opens up the network again. And to be fair, Solana's biggest haters, the Cardano community, the AVAX community, whatever, wish they had a problem like this.

26:09But then they can easily snipe at you when all the energy is on the Solana blockchain. Yeah. Well, remember, we had the same in ETH back in 2021. The NFT craze that happened on ETH, it was massive. And it just, plus DeFi, plus everything else, suddenly overwhelmed ETH. The gas fees went up, the network was clogged. You couldn't get transactions through. So that's actually a good sign. It shows you've got product market fit. Your thesis for Bitcoin earlier discussed earlier in this conversation was at least a$200 ,000 Bitcoin top of cycle for Solana. As that is your biggest bet in crypto today, where does that put Solana?

26:54look we don't really know but i i would assume that if solana's at 200 ish today right for it to go up 100 would be in crypto summer would be highly unusual at least 300 would be pretty standard that would be eth all-time highs versus the previous all-time highest of that high so that will put it 600 so let's mark that as like that's a reasonable spot you know if i use a few charts and a bit of you know log charts i get somewhere between 800 and 1200 in a in a complete bubble cycle i think it can go above 2000 in a short stunted cycle, 750, something like that. But it's still all to play for is the point.

27:50Raul, you gave some of the best advice earlier this year on your channel. Don't F this up, meaning don't lose your money by speculating in the crap. Stick to the quality, stick to your plan. I have followed that advice thus far. I'm not F-ing it up. What's another piece of advice you have for me? well within that there's a few things one is don't use leverage because the entire game in this adoption curve of crypto where the whole market cap is going from let's say 2.7 trillion dollars today to maybe 10 or 12 trillion dollars the end of this cycle to maybe 100 trillion by 2035 or something right you're the entire game is to be in the game Now, when you use leverage, if the market pulls back, you lose your coins.