Coin Bureau: Inside the 'Banana Zone' & 2024 Crypto PREDICTIONS with Raoul Pal & Arthur Hayes

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0:48Link in description. Join me, Raoul Pal, as I go on a journey of discovery through the macro, crypto, and exponential age landscapes. In The Journeyman, I talk to the smartest people in the world so we can all become smarter together.

1:07So, yeah, I think Doge gets an ETF before the end of the cycle. Aptos flips Solana in the layer-on game. I'll put that out there. I didn't want to say it. I didn't want to say it. Charles is going to come whoop your ass. Let me tell you, getting the great minds that are Arthur Hayes and Mal Powell together, at the same time, it wasn't easy, but it was totally worth it. In our conversation, they share the most degenerate plays in their portfolios and what narratives and projects are going to take off in this market cycle, and much more besides. To say a lot went down in this conversation would be an understatement.

1:48Wow, well, what an all-star panel. Thank you so much for joining today. Let's jump straight in because 2024 and the crypto markets has been on an absolute tear. We have seen in the month of May alone,$420 billion added to the crypto market cap. We have seen ETF frenzies. We have seen Memecoin mania and the Bitcoin halving, just to name a few. We're not even halfway through the year yet. I'm so curious when it comes to your strategy so far this year and also your all-star play of the year so far. Arthur, let's start with you. What have we got? Strategy? Be long. don't sell don't get shook don't use too much leverage uh i mean it's pretty simple like everyone knows what they should be doing obviously we all never do it because it's you know fun the yolo's and bullshit but at the end of the day it's very very simple if you believe that central banks and governments are in debt will continue to be in debt will continue to print money will continue to hand out you know welfare to buy votes or support from the population at large then crypto is the answer.

2:56Obviously, Bitcoin is the OG thing and that's a lot of Bitcoin. And then as you move up the risk curve and hopefully up the return, potential return curve as well, then you get into the shitcoin space. Obviously, the standout thing for Maelstrom, my family office this year has been Athena in terms of how amazing Guy and his team has executed on this vision of creating a synthetic dollar and displacing Tether at USDC. I think that Athena now sits at about$3 billion-ish circulation, which puts it the number four, fourth largest, if you want to call it, US dollar stablecoin out there. And I think that that is probably our best thing that we've done as a front this cycle.

3:43And I think that we're only getting started in terms of the impact that Athena is going to have on the ecosystem. And then probably number two would probably be something called EtherFi and the whole liquid restaking token ecosystem. Obviously, Eigenlayer is going live later this year. We have a bunch of other plays in that sort of vertical as well. So I would say those are the two things that are standout highlights for our portfolio so far this cycle. Okay, awesome. We'll get to Athena a little bit later. So, Val, I'm curious to hear from you, last play of 2024 and how have you played this year?

4:19To do absolutely nothing has been the best play of all. Just, you know, I'm like 90 % Solana. It's been the right bet to have over the cycle so far. The only play I've done this year in any meaningful size was I took top-sliced Solana as it was coming from 150 over to 200, top sliced it and started buying the high end of NFTs. So I bought pretty much every single BPO I could possibly buy. And then I bought every single X copy I could afford, building a long-term portfolio. These things were quite beaten down. And my view is this space goes from 2.5, 3 trillion now. By the end of the cycle, it's 10 to 15 trillion.

5:04By the end of, let's say, 2032, just extrapolating the normal log trend of this, it's$100 trillion by 2032. That from here is$97 trillion of wealth that is going to come. This is the largest, fastest accumulation of wealth in all recorded history. Let's assume I'm a total moron, which is a good thing to do, and I'm wrong by 50%. It's still a$50 trillion wealth accumulation. That is the entire history of wealth accumulation of the S &P 500 and its market cap. So the amount of wealth that's going to get generated is going to get recycled into the space. People will buy high-end property in nice places, but a lot of people in this space won't go outside of this space.

5:46And it gets recycled, whether it's VC, whether it's the opportunities of building the applications layer, but really people seek trophy assets. And so I've just been buying as much trophy assets as I can for a kind of long 10-year time horizon, because I think this is the last chance you'll ever get to buy this stuff at the kind of prices it is. You always end with a really motivational, if you've not bought crypto yet, this is the last time, guys. Don't sleep on it. Yeah, don't fuck this up. How many times can we say this? Don't fuck this up. Yeah, sleep. Cut it, guys. So, Val, you've also said that we are in a banana zone right now.

6:23We're coming into the banana zone. We're coming into the banana zone. Do you wear a banana hammock in the banana zone, Raul? Is that when we know we're in the banana zone? For you, Arthur, anything, mate. Anything. You'll see. Englishman gets arrested in Singapore for wearing a banana hammock. You'll see it. Hi, everyone. Listen, if you want to unfuck your future, let me help you. Follow this channel, subscribe, click the notifications, and you'll get everything as soon as it comes out. See you there. So how do we play this? How do you position the upcoming banana zone and what happens next? For those that have not listened to the video.

7:04The banana zone is something that both Arthur and I talk a lot about. It's that pointless cycle where liquidity comes in, where central banks need to refi all of the debt. It's when politicians bribe the people with plenty of candy. It's that moment that crypto tends to go vertical. And it's very cyclical. It's driven by this macroeconomic forces of this debt refi cycle. It affects all the asset prices over the time. But crypto is the one that goes truly bananas. So again, the simplest way is don't fuck this up. So just have a core portfolio, the big stuff. But if you get the other stuff right, you can make a lot of money in the other stuff, the 10%, 20 % of your portfolio, there's a bit more degen.

7:46That's when you're going to see some really interesting stuff. Now, if you go back to the classic banana zone from the last cycle, that's when Solana, Avalanche, Luna, and Matic came. And the performance in one year out of those four tokens was insane. We're going to see that repeat. Who's it going to be? What's it going to be? I don't know yet, but that's a game to be had in the banana zone. And it's part of the fun that you can actually degen in and feel like you've really nailed something because really most of the game is just doing nothing and just letting it all play out hey everyone we're gonna 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

8:41now let's talk the gen zone because arthur since you last came on the show you mentioned dog with hat and you said i think something along the lines of like that's the greatest fucking money of all time i did not buy any dog with hat and it has i own dog with hat i own with there we go

9:02And here we are. Meme coin frenzy has gone absolutely bonanzas. It has outperformed every other narrative by a mile. Have we still got room to run? Arthur, when it comes to the market cap, is this just going to keep growing? And is there any, like this kind of narrative is what I'm watching right now, or is it just throwing money at a dartboard and seeing what works? You know, the reason why I know that meme coins are here to stay and are going to get even crazier as there's more money printed is. So I'm in Singapore a lot, and it's a small place and a very homogenous society between the major ethnicities.

9:39And every time I walk down Orchard Road to the shopping district to do some errands, I walk by the Chanel store, LV, Gucci, whatever, all the mainstream big brands. There is always a line of local Singaporeans standing in line to buy whatever piece of of alphabet that they want to put on their body for like thousands of seeing dollars. And they're literally standing in line, you know, 15, 20 deep, waiting to get in this store to blow probably their whole paycheck for a few months. And they continue to do this over and over and over and over again. So if people are willing to spend in line to, you know, buy cow high with L and V tattooed on it, then they're certainly going to sit on their computer and the internet and trade whatever the meme coin is that's hot this cycle, because you don't have to understand anything about crypto.

10:26just like you don't have to understand anything about fashion. Everybody else likes it. I like it too. Very, very human. So I think main coins are here to stay. For the person who's just being initiated into crypto, it's like literally the easiest thing to understand. Oh, yeah, that's a cool image. That's a really funny joke that I understand. And everyone else is in on the joke. And I can make money as the joke gains in virality. Okay, cool. I'll buy this main coin. I don't need to understand blockchain and AI and crypto and cryptography and all the stuff that is predicated on why these things can exist on a blockchain and trade 24-7 on a decentralized exchange.

11:03I don't have to understand any of that. I just have to understand, is this a cool cultural trend or not? And I'm already doing that in my normie life in the IRL space when I go by one of these expensive brands and stand in line for hours to put some logos on my chest. So I think just, you know, observing the behavior of humans, just, you know, why RNO is, what is he, the wealthiest man in the world? If you look down the list of the wealthiest people, like a good percentage of them own luxury brands. Meme coins are the luxury brand of crypto. It's easier to even get in because you don't have to wait and fucking wait in line.

11:39Just, you know, I mean, assuming that the salon of blockchain works, but, you know, all that being said, then yeah, you can ape into these things on your preferred decentralized exchange. Hopefully you do it on Drift, one of my portfolio companies. I had coffee yesterday with Meow from Jupiter. And we were talking about exactly this, is that what's so interesting about meme coins is that utility is either zero or small. Bonk has some utility. Shiberino has some utility. but the actual cultural value is the attention these things get the attention is upstream of everything and so it's so easy to understand you don't need to value it is does this capture attention is that attention persistent and do i get some sort of feel-good factor or status by owning it and it's the same as a lvmh you know a louis vuitton handbag and it's the same with fine wines.

12:41It's the same with the meme on the internet that you share. It's all the same thing. It's just concentrated attention. And which narrative people can understand better? If you ask a regular retail investor their difference between understanding and adopting eigenlayer white paper and then also dog with hat, it's a wonder which one they're going to pick up and which one they're going to be able to give an elevator pitch to the next potential investor. It's certainly an interesting time. Now, I'm curious to hear from you both when it comes to the degeneracy that is the crypto market in 2024. What have been, if you have any, any of your degenerate plays?

13:19It's not your first rodeo in crypto. You have been in a few market cycles. Are you having any degenerate plays at the moment or things that you're watching in your portfolio? I'm pretty. I'm less de - I just don't have the time. I just don't have the time. So if you think of a lot of the DGEN stuff is basically attention. I don't have enough attention to give out because I'm too busy. So I've kept it pretty straightforward. So I've got whiff, bonk. I still own Doge because I still think Elon's going to do something with Doge. And that's about it. I observe the space. Everyone reads Anthem's feed and trying to figure out what the fuck's going on, stuff like that.

13:57But I don't have enough attention to give out to the attention that it needs. So you actually need to know what you're doing a little bit. So Arthur is obviously, you know, he's a man of leisure. He can do whatever he wants. Yeah. I mean, to Raul's point, my leisure consists of running around a court and hitting a felt ball or, you know, putting on a piece of board and skiing down the mountainside. So I also don't have the attention to spend on which particular doggie coin is the hottest one. I own some with Dogecoin as well. I think Dogecoin is going to get an ETF by the end of the cycle just because.

14:30Yeah, I think so as well. Oh, really? Yeah, I agree. Yeah. It's the oldest meme coin. It's on Robinhood in the US. If you're thinking about TreadFi getting into crypto and they're going to put an ETF in anything they can, it's a high market cap thing. It's been around for a while. It's like the original meme coin joke. I mean, Palmer fucking rage quit from crypto, even though he created this amazingly hilarious thing. So yeah, I think Doge gets an ETF before the end of the cycle. So I'm all... We were speaking to the team at Bitwise, which is one of the ETF issuers in the United States, and they were saying to get new investors to understand Ethereum and the elevator pitch behind it is going to be slightly problematic.

15:11It's still taking them time to wrap their head around Bitcoin. So if we do hypothetically see a Dogecoin ETF, do you think the narrative could lead it to actually flip for higher demand for a Dogecoin ETF than the likelihood of demand for Ethereum ETF? I hit up Jan Banek. It was just last week. I said, Jan, you've got to do this. You've got to file for the Dogecoin ETF. He's like, I just want to make sure I don't go to prison first. I said, look, you'll be fine. It's been around. It's proven itself. It's outperformed Bitcoin every cycle. I mean, it's been astonishingly good. So I'm working in the background to try and make this happen.

15:49But I haven't got through Jan yet, but I'll get somebody. We'll get Hunter Horsley, Yan, one of these guys, will force across the line. It's unlikely to be BlackRock, but we'll give that a go too. Please keep us posted. We'll find a little community. We'll push forward and forth. So Arthur, sorry, you mentioned the Dogecoin ETF could be a thing. You mentioned you're too busy for most of the meme coins. Is there any other sub-narratives that you think that could be a on one. In terms of like meme coin narratives or more general in the space? I mean, I think a lot of meme coins are too specific and like some of the political ones.

16:36Yeah, they're funny for a minute, but they don't have any lasting cultural value. Like what happens if Biden dies, right? Statistically speaking, he has a seven or 8 % chance of dying in the next 12 months. Same with Trump, right? This is just looking at actuarial tables. You've calculated this with actuarial tables. This is why he's got too much time on his hands. So, again, okay, yeah, the Bowdoin each have is funny, or Elizabeth Warren, whatever, some of these U.S.-specific things, but how do you, why is Dog With Hat great? Because I can put a little hat on, and whether you're a Korean or you're Chinese or you're American or you're from Argentina, wherever you're from, you get it.

17:19It's funny. I'm sorry, talking about American politics. Number one, I've offended half the people in America. And number two, anyone who's not American, which is 95 % of the rest of the fucking world is like, okay, cool, I get it. But that's not really resonating with me. So I like I think a lot of the memes that I see are too specific on some piece of culture that isn't going to be globally relevant on an online community that's basically cross border. So if there's anyone who's thinking, oh, I guess you're going to start a meme coin and it's going to be a billion-dollar market cap within a weekend, probably not if you're trying to base it on something very specific to you or how you grew up or something like that.

17:58It has to be a global thing that's not offensive, that is inclusive, but funny at the same time. And it's actually a good place to test out narratives is here in Singapore because that's that kind of, as you said, it's a culturally diverse Asian audience of, you know, Asians are big gamblers. They love meme coins. There were big buyers of Doge and most of the other kind of dog coins and stuff like that. And you just have to see, is that going to resonate here? And they don't care about TREMP and all of this kind of stuff. They want something that they can talk about that crosses cultural boundaries.

18:34Amazing. Let's bring it back now into a more sensible adult conversation. We've got the Mean Coin Mania out of the way. I had to get it in. You've got the wrong people for that. Everyone watching wants to know your plan. by following you guys. Let's take a look at the US elections because you guys are macro gurus as well. How are you expecting the US elections to impact the markets? And what should we be doing in the buildup to keep an eye out, protect ourselves and also make the most of if we do see a market pump along the way? I mean, my view is we have no real... Yeah, go on, you go first. I would say they're the same candidate.

19:16They're old idiots, both of them. And both of their parties that are behind them, they're the front people. And so they're going to stand behind them all the way because of all the goodies that flow with whoever's in charge, right? Whether it's Democrats or Republicans. And if you look at any sort of estimation by, you know, bipartisan outlets on the state of the deficit, it's not like it's, you know, one person is going to cut spending and run a balanced budget or surplus and the other is not. They're both saying, elect me and I'll give you free shit paid for by the other people that lost. That's the message.

19:55And so which one of those messages resonates better? I don't know. I don't give a fuck what message resonates. I just know that they're both printing money and therefore anything that was working today, whether it's big cap tech or crypto is going to work after the election. Maybe there's going to be some some volatility if you have some sort of like, you know, civil war type scenarios or, you know, a dust up between, you know, either side, depending on what happens with sort of the Trump sentencing. If he's in jail, he's not in jail, whatever. Right. But at the end of the day, I think that's not really going to be meaningful at the end of the day.

20:31And one of them will be elected. And even if they even if it's a Republican, president, Democrat, House and Senate or vice versa, think about the things that both parties vote on together every single time. Weapons. Right. Ukraine, Iran, Israel. Every time there's ever an ask for we need more money to give to the American defense companies to bomb more people, everybody lines up and says, yes, please more. And so if you look at the breakdown of the biggest expenditures of the U.S. government, apart from health care interest expense, it's veterans payments and defense. So it's war. The American economy is geared to kill people.

21:16And both political parties are happy to kill people as long as their stocks go up. And so, again, it's the same thing, same party. You know, depend, which clown do you like better? So I don't really care. It's fun to watch. Hey, everyone. We're going to take another quick break and hear a word from our partners, and then we'll be right back.

21:38Yeah, and part of that is, I mean, if there's any volatility, maybe one of those two drops out. there's violence is obviously likely to happen at some point in this just because of how divert divided the society is but the when you when you narrow everything down the outcome for everything is printing money so the worse anything happens in the us the more likely they are to print money so election years tend to be very very positive and the year after for risk assets just because everybody's buying votes and then kind of proving themselves afterwards and mocking up the pieces and paying that interest on the debt.

22:20So there's that military side. You've then got all the retirees who are the baby boomers with all the votes. Well, they want their healthcare. And then the third part of the equation is somebody needs to pay the interest on the debt. And the only way of doing this is the magic money printer. I also saw that the Heritage Foundation back in the day is saying they're looking to erode the Fed's independence if they do come into power. Is that something that you would... No? They're already not independent now. That's a whole... Oh my God. The Fed is independent. Joe Powell is impotent. He can't...

22:54Even if he leaves, he's like the most powerful person in the world. Janet Yellen can do whatever the fuck she wants. And yeah, Powell hasn't raised or cut rates, but Yellen can drain the Treasury General Account by$800 billion for the stroke of a pen. And, you know, she can cut a bank off of Swift if she wakes up on the wrong side of the bed. Yeah, she's the most probable person in the world. And her number one job is to get Joe Biden reelected. And so whatever, you know, Powell and all the governors can write all these fancy fucking papers over, you know, Mariner Eklis building in New York. But the Treasury Department runs a show and they always run the show.

23:30And if you read some of the papers that there's a recent paper by the Atlanta Fed on central bank effects swaps. And essentially the paper was arguing that the Fed has always backed up international dollar borrowers ever since it was created in 1913. And it goes stepwise through every single incident where the Fed essentially printed money and handed it out to a foreign institution or a foreign branch of a bank. And the conclusion of the article was, we've been doing this for 100 fucking years. So let's do it some more if we need to. There is no independent Fed. That was written, I think, last month by the Atlanta Fed.

24:10Great paper. I highly recommend reading it if you have time. You follow Arthur's argument. You can see there's a shortage of dollars around the world. We lost US banks. We lost a giant Swiss bank. We're losing dollar yen. That's a shortage of dollars. And we've got Yellen going to China twice. She's there because her other job outside of getting Joe elected is to sell bonds. She's the Mike Milken selling junk bonds, going to China, doing the roadshow. China's like, yeah, we'd love to buy your bonds, but we don't have any dollars. So you give us dollars and we'll buy bonds. So they have to figure out how that can be done.

24:49Now, nobody really wants to give China direct swap lines. They probably do it through Japanese bond intervention, currency intervention. Either way the G20 is coming up or G7 is coming up, there'll be some magical allowance for everybody to have enough dollars, the system to move forward and everything to happen. So there has been no independence since 2008. I think everybody, I don't think there's much independence between central banks either. I think the BOJ kind of taught everybody the trick. Everybody's followed suit. They've all got the same problems, which is the debt and the aging populations.

25:21And everybody plays the same card. And there's the BOJ and the MOF, they stopped being independent in the 90s, even though on paper they are. And so it is all driven by the Treasury and required to refinance this debt since 2008. What do you think is the biggest threat to the financial systems right now? Because with the ability to understand the macroeconomics that is going on in the world, you can see the world differently to most. So is there any catalyst or risk factors that you can see unraveling before our eyes right now that we need to know about? Okay, there is one for me, and it's not the obvious one.

25:58I think the biggest risk we're about to take for, let's say, three-year risk is a ridiculous bubble. I think there is a growing, big, huge, possible narrative of having a 1999-style bubble. I think if there's a risk of that, then you get an overhang. And you could skip a crypto cycle. You could skip a tech cycle like we did back in 2003 to 2007 or something like that. So that's the biggest risk. I think all left-tail risks have been removed, all of them. I actually personally believe that China and the US are agreeing or have agreed to negotiate Taiwan in exchange for Taiwan Semi. There's no other outcome that can happen without them going to war.