Raoul Pal: Ethereum to $18,000? ("The Whole Thing's a Super Cycle") — Transcript

Full transcript

1. 0:00And so we say, "Okay, maybe one standard
2. 0:01deviation the trend slows down somewhat
3. 0:03and let's say we top out somewhere in
4. 0:09Q2 2027.
5. 0:12Reasonable. We get to about 18,000 ETH.
6. 0:15>> I actually think the whole thing's a
7. 0:16super cycle.
8. 0:17Crypto, tech, the whole lot, and it
9. 0:19doesn't stop.
10. 0:20I think it's going to suck in all of the
11. 0:22capital.
12. 0:23>> It doesn't stop, what does that mean?
13. 0:25>> It just means it keeps going till 2030.
14. 0:30>> That's Raoul Pal, ex-Goldman [music]
15. 0:32Sachs, founder of Global Macro Investor
16. 0:35and co-founder of Real Vision. This
17. 0:37week, [music]
18. 0:38on When Shift Happens and at Real
19. 0:40Vision's Festival of Trading, he showed
20. 0:42his Ethereum math. First, his method,
21. 0:45because it's almost boring. He buys only
22. 0:48when an asset falls far below its
23. 0:50long-term [music] trend line, then
24. 0:51holds. This year, he says that meant two
25. 0:53trades.
26. 0:54>> Nothing different except buy when it got
27. 0:56two standard deviations oversold versus
28. 0:58log trend and I added more and I bought
29. 1:01some Zcash. Um
30. 1:04that's all I've done. I mean, I've I've
31. 1:06done two trades
32. 1:08the entire year.
33. 1:09Um which was to buy in
34. 1:12whenever it was, Jan, Feb, whenever it
35. 1:14collapsed first and then buy again in
36. 1:18July.
37. 1:19>> His bigger claim is about Ethereum. He
38. 1:21thinks smart contracts win this cycle
39. 1:23and he has a simple test for what the
40. 1:25network is worth.
41. 1:26>> My thesis has been that smart contracts
42. 1:28will outperform significantly this time.
43. 1:31So, that's
44. 1:32>> Why?
45. 1:33>> Because the applications layer of what
46. 1:36finance is building
47. 1:38and what the agents are doing is all
48. 1:39smart contracts. So, it's stable coins,
49. 1:42it's real-world assets on chain, it's
50. 1:44tokenizing equities, it's perps, it's
51. 1:47all of the things that are being built
52. 1:49are all smart contracts.
53. 1:51So, what you're seeing is a massive
54. 1:52demand for smart contracts. With
55. 1:54Ethereum, it's really simple. You have
56. 1:56to ask yourself,
57. 1:57"If I turned the switch off to Ethereum
58. 1:59tomorrow, if you theoretically could,
59. 2:01how much value did do you destroy today
60. 2:03>> [music]
61. 2:03>> and into the future? It would remove 70%
62. 2:06or 76% of all stablecoins in existence.
63. 2:09It would remove [music] what,
64. 2:1070-something percent of all DeFi.
65. 2:13It would remove most of real world
66. 2:15assets.
67. 2:16>> [music]
68. 2:16>> Um it removes all of the digital art
69. 2:18market and it removes all of the layer
70. 2:20twos.
71. 2:21This is a trillion dollars plus of value
72. 2:24that will be turned off. If you just
73. 2:26discount on the forward basis, maybe 1
74. 2:28and 1/2 trillion of value. So it's kind
75. 2:30of like it's wildly undervalued.
76. 2:32>> His host put a number on it. With Ether
77. 2:35worth about $300 billion, it should be
78. 2:37at least five It should be at least five
79. 2:39times higher. Raoul's answer, yeah,
80. 2:42exactly.
81. 2:43Five times today's price would be about
82. 2:45$12,000 a coin. Now the chart. On stage,
83. 2:49he pulled up Ether's long-term log
84. 2:51trend. The line it is compounded along
85. 2:53with bands for how far price strays from
86. 2:55it. Here's the whole history since 2015.
87. 2:58>> And now what we've got is the implied
88. 3:00keger of 76% because we had this
89. 3:02acceleration phase earlier.
90. 3:04And
91. 3:06we got somewhat oversold.
92. 3:08And now we're forming this wedge pattern
93. 3:10and we put in the 13 low. So this is all
94. 3:13on the monthly, so that's a very
95. 3:15powerful signal. So we know it should be
96. 3:17rising. It's in a secular trend. It's
97. 3:20oversold.
98. 3:21It's two standard deviations oversold
99. 3:23versus its weekly trend.
100. 3:25We know that the trend is about between
101. 3:2875 and 50% a year increase in price.
102. 3:32Okay.
103. 3:34And what we've had is a large sideways
104. 3:36consolidation pattern over time. That
105. 3:38tells you it's likely to accelerate.
106. 3:40Now, two standard deviations overbought,
107. 3:42let's say we get there by
108. 3:46July 2020. I'm just taking a random
109. 3:48example, it's not a prediction.
110. 3:50Well, that gives you a of
111. 3:5360,000 [music] ETH. Now,
112. 3:55that sounds unreasonable. Okay, fine.
113. 3:57So, we say, "Okay, maybe one standard
114. 3:59deviation, the trend slows down
115. 4:00somewhat, and let's say we top out
116. 4:03somewhere in
117. 4:06Q2 2027. Reasonable. We get to about
118. 4:1118,000 ETH.
119. 4:12Is that reasonable compared to how ETH
120. 4:14has moved in the past?
121. 4:15>> Quick favor. If this is useful,
122. 4:17subscribe. We break down a new call
123. 4:19every day. So, what's his downside?
124. 4:22Here's how he sizes the risk.
125. 4:23>> So, trend line is currently at 1,600.
126. 4:26Let's say 1,500. Okay, 1,500. ETH is
127. 4:30currently at
128. 4:312,700.
129. 4:33So, that's 1,200 points of risk.
130. 4:35Okay, that's a reasonable amount of
131. 4:37risk, right? But, the upside
132. 4:39is 300%.
133. 4:42So, you got like 50% downside, 300%
134. 4:44upside. So, that's a 6:1 risk-reward.
135. 4:47Okay. Now, we're talking.
136. 4:49>> One update since he spoke, Ether has
137. 4:51slipped. It's near 2450 today after a
138. 4:54hard year. That puts his 1,500 floor
139. 4:57about 39% below. So, how long can this
140. 5:00run?
141. 5:01His normal clock is the [music] debt
142. 5:02cycle. With debt rolling over about
143. 5:05every 5.8 years, he gets to roughly
144. 5:08mid-2027.
145. 5:10But, he thinks this one is bigger.
146. 5:12>> I actually think the whole thing's a
147. 5:13super cycle. [music]
148. 5:14Crypto, tech, the whole lot. And it
149. 5:16doesn't stop.
150. 5:18I think it's going to suck in all of the
151. 5:19sectors.
152. 5:20>> It doesn't stop. What does that mean?
153. 5:23>> It just means it keeps going till 2030.
154. 5:25>> 30?
155. 5:26>> Something like that. So, this is like
156. 5:28we're kind of in 1997, '96 in uh what
157. 5:32happened in the technology boom last
158. 5:34time.
159. 5:35Um and it barely started. It really
160. 5:37accelerated after that.
161. 5:39>> And the catalysts, he says, are already
162. 5:41here. The US passed its first major
163. 5:43crypto law last year, and Washington now
164. 5:46wants stablecoin issuers buying its
165. 5:47bonds.
166. 5:48>> Everything we've ever asked for
167. 5:50from
168. 5:51regulation [music]
169. 5:52to sovereign wealth funds buying
170. 5:54Bitcoin, to the entire financial system
171. 5:56now committing to build on this, to the
172. 5:58US Treasury saying stablecoins are one
173. 6:01of the most important single things that
174. 6:02we can do, that we want to sell our
175. 6:04bonds to stablecoin holders.
176. 6:06And we don't think that the price is
177. 6:08going to explode.
178. 6:09>> So, you still think that the price of
179. 6:10crypto and Bitcoin is going to explode?
180. 6:13>> Yeah. Yeah, I can't see I can't see a
181. 6:15world where it doesn't.
182. 6:16>> Mhm.
183. 6:17>> I can't You just can't. Because what
184. 6:19you're doing is you've set up an
185. 6:20infrastructure layer
186. 6:22that produces block space, and we
187. 6:24haven't been using a lot of it.
188. 6:25And now we're going to use a lot of it.
189. 6:27So, therefore, it gets more valuable.
190. 6:29>> He doesn't hide the pain, though. Even
191. 6:31in a bull run, he says expect brutal
192. 6:34drops.
193. 6:35>> Now, don't forget Solana in 2020 was
194. 6:37down 80% in the middle of the bull run.
195. 6:40And [music] Ethereum did it in 20
196. 6:4317.
197. 6:45In the middle of the bull run, these
198. 6:46things fell 50, 60, 70% and still ended
199. 6:49up like up 50x.
200. 6:52So, volatility, you don't know when it
201. 6:54comes. If you
202. 6:55If you just tell yourself
203. 6:58I'm going to have a 50% drawdown easily
204. 7:01and maybe more.
205. 7:02>> His answer to all that volatility?
206. 7:04Do almost nothing. No trading around the
207. 7:06cycle and no leverage.
208. 7:08>> And I just find it easier to do nothing
209. 7:10and to hold. And that's why I don't use
210. 7:11leverage. I'm
211. 7:12I'm a hedge fund guy. I used to use
212. 7:13tremendous amounts of leverage in
213. 7:15currencies and everything else, but I
214. 7:16don't need to. We're blessed
215. 7:18with the greatest trends in the history
216. 7:20of markets.
217. 7:21>> In today's numbers, Ether is near 2450.
218. 7:24So, his 18,000 is about seven times
219. 7:27higher. Not a promise. Ether fell 62%
220. 7:30from last October to June. And this
221. 7:33isn't financial advice. One favor?
222. 7:35If you got something out of this,
223. 7:36subscribe. It costs nothing and it keeps
224. 7:39this channel making these every day. Is
225. 7:42$18,000 Ether realistic? Tell me in the
226. 7:45comments.
227. 7:59>> [music]