- John Deaton interviewed influential investor Raoul Pal, who predicted mass crypto adoption with up to one million active wallets by the end of 2024.
- Pal argues that US regulators hinder banks and financial institutions from investing in crypto due to political fears, noting that the US is reluctant to engage in international discussions about CBDCs.
- He advocates for an end to tribalism in the crypto community and the need for collaboration for the success of the entire ecosystem.
- Pal links future crypto market dynamics to government stimulus, central bank policies, and innovation, predicting a potential surge similar to 2017.
Macro Investor Meets Crypto Lawyer
The crypto space is always abuzz with engaging topics and discussions. However, the scenario where a leading lawyer in the field interviews a top-tier investor garners exceptional attention. In a noteworthy episode of his CryptoLaw podcast, John Deaton, acclaimed for championing the rights of over 75,000 XRP holders against the SEC, hosted Raoul Pal, an ex-Goldman Sachs executive and renowned crypto enthusiast.
Deaton asked Pal how far away crypto is from mass adoption. Pal explained that the way he looks at it is by the number of active wallets. Although there are currently some 500k crypto wallets, not all of them are active. But importantly, their numbers are growing – in 2022 alone, the number of wallets grew by 42%, Pal said. This growth rate was the fastest for any technology until the advent of artificial intelligence.
Despite this rapid expansion, Pal believes the sector is still in its nascent stages and projects that the number of active wallets could reach between 750,000 to 1 million by the end of 2024, potentially leading to mass adoption with 2 to 4 billion users thereafter.
Banks know that crypto solves many problems
The real problem stopping crypto adoption, according to Pal? US regulators are stopping banks and other financial institutions from investing in crypto, although institutions are still interested in it.
They are sh*t scared of Gary Gensler and Elizabeth Warren. It’s political, it’s out of fear over control over money.
Raoul PalPal added that the United States is in a de-facto protectionist mode right now, as it refuses to talk to other countries or even the Bank of International Settlement (BIS) about central bank digital currencies (CBDC).
Interestingly enough, the US is dragging their heels on this as well. When I spoke to Sopnendu Mohanty, Chief Fintech Officer of the Monetary Authority of Singapore, he said: ‘There is one black hole. The US – they won’t talk to anybody about CBDCs.
Raoul PalEnd Tribalism
If there’s one label that doesn’t fit Pal, it’s that of a ‘maxi’ of any kind. When he shifted his holdings from Bitcoin (BTC) to Ethereum (ETH), he says the BTC maxis never forgave him. Now that he is heavily invested in Solana (SOL) he receives similar criticism. However, both Deaton and Pal agreed that crypto will not be dominated by just one chain or network. There are going to be multiple networks each building real use cases like DeFi, NFTs and a lot more. Also, for crypto to succeed and be the new financial system everybody needs to start working together.
What we should be rooting for is everybody to succeed. It’s not about them versus us.
Raoul PalScenarios for Crypto Going Forward
Pal then discussed the potential dynamics of the next crypto cycle, linking it to government stimulus efforts, central bank policies, and the innovation within the crypto space. He suggested that governments might increase spending to appeal to voters, requiring support from central banks in keeping interest rates low.
This scenario aligns with what he describes as a typical crypto cycle, particularly during Bitcoin halving years. Pal also anticipates a significant influx of capital due to new Exchange-Traded Funds (ETFs) and blockchain applications for real-world assets. He further highlighted the evolving use of NFTs and the potential for mass minting on platforms like Solana, along with the growth of stablecoins and the rollout of Central Bank Digital Currencies (CBDCs).
Pal sees these developments leading to broader acceptance and integration of crypto technologies in various industries. He speculated that all these factors could lead to a market surge similar to the 2017 cycle, though he acknowledges the unpredictability of these cycles.
Each drawdown from every bear market in Bitcoin is less than the last. It’s like ETH first time around was 97.5% down, second time 80%, third time probably 70%. You know Solana first cycled down 98.5% next cycle if it does well and thrives, it will be 80% right, and Bitcoin will be less the next time around.
Raoul Pal
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