After predicting a significant bull run for Bitcoin and calling it a “life raft,” Raoul Pal discussed several issues within sectors of the traditional financial world.
Former hedge fund manager and CEO of Real Vision, Raoul Pal, believes that the real impact of the COVID-19 pandemic is about to reach the financial markets. By outlining several upcoming cornerstones among traditional financial assets, he highlighted Bitcoin as the “life raft” in this situation.
Raoul Pal: Everything Has Changed
In a recent Twitter thread, the Wall Street veteran outlined the rapidly growing COVID-19 cases worldwide. The total number of infected has neared 45 million, while the death toll is almost 1,2 million.
Pal predicted that these rising numbers in Europe, the US, and Canada are about to “exert economic pressures and extinguish the Hope phase of reflation dreams.” He believes that the upcoming consequences will harm the economy even more than the early 2020 developments. A real economic recovery “will take more than a post-election stimulus in January.”
He continued by looking at several markets that have started to feel the adverse consequences and have fallen to long-term support levels. Those included the oil price, Spain’s benchmark stock market index – the IBEX 35, the EU Banks Index, the euro, the British pound, the US dollar, and more.
As such, he broached a few possible solutions – “you can buy bonds and dollars, or you can take the life raft – Bitcoin.”
“Or, to dampen the volatility of a risk-off event (we can and will see sharp BTC corrections), you can have all three for a near-perfect portfolio for this phase.” – Pal concluded.
In 1987’s Black Monday stock market crash, Sam Walton, the world’s richest man, lost more than half a billion dollars in a few hours.
When reached for comment, Walton said, “It’s paper anyway. As far as I’m concerned we’re focusing totally on the company doing well and taking care of our customers.”
He didn’t care about dollars; he cared about his asset Wal-Mart, and he still owned that.
History of the #HODL
In bitcoin’s volatile and roller coaster past, “HODL” was the meme that bound the cryptocurrency community together. It stood for the proposition that we all believe in the future of bitcoin. It’s both funny and insightful.
Here is the original post by GameKyuubi on a Bitcoin Talk forum (spelling errors and profanity included):
I AM HODLING
I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e. GF’s out at a lesbian bar, BTC crashing WHY AM I HOLDING? I’LL TELL YOU WHY. It’s because I’m a bad trader and I KNOW I’M A BAD TRADER. Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro. Likewise the weak hands are like OH NO IT’S GOING DOWN I’M GONNA SELL he he he and then they’re like OH GOD MY ASSHOLE when the SMART traders who KNOW WHAT THE FUCK THEY’RE DOING buy back in but you know what? I’m not part of that group. When the traders buy back in I’m already part of the market capital so GUESS WHO YOU’RE CHEATING day traders NOT ME~! Those taunt threads saying “OHH YOU SHOULD HAVE SOLD” YEAH NO SHIT. NO SHIT I SHOULD HAVE SOLD. I SHOULD HAVE SOLD MOMENTS BEFORE EVERY SELL AND BOUGHT MOMENTS BEFORE EVERY BUY BUT YOU KNOW WHAT NOT EVERYBODY IS AS COOL AS YOU. You only sell in a bear market if you are a good day trader or an illusioned noob. The people inbetween hold. In a zero-sum game such as this, traders can only take your money if you sell.
so i’ve had some whiskey
actually on the bottle it’s spelled whisky
(But only if it’s payable in BTC)
It was not about bitcoin versus bitcoin cash or 1,000 other cryptocurrencies. It was bitcoin vs. the world and we ALL embraced it.
It only took 11 minutes for this post to become a meme that became the rallying cry for the entire crypto world. We were all on the same rollercoaster ride and GameKyuubi, in the depths of his frustration, had (sort of) elegantly articulated both what it feels like and the best trading strategy for an asset this volatile.
So the doomsayers were right all along. Crypto was nothing but a bubble and it finally burst.
Maybe you’re surprised to hear that coming from me, someone who’s dedicated more than a few words to the power of crypto to change the world. Did I suddenly have a change of heart? Did I jump on the Paul Krugman bandwagon and finally realize that Bitcoin is evil? Did I join the naysayers who laugh with glee every time the price drops and arrogantly shout that Bitcoin is going to zero?
I say good because the circus has finally left town. The cameras have packed up and gone home. The reporters are losing interest. The story is finished.
And now the crypto community can get back to doing the hard work of building the future in peace and quiet.
I’ve always said the bubble would burst and in the long run it wouldn’t matter in the least. In retrospect I think Bitcoin getting to $20,000 so fast was the worst thing to ever happen to the community. For years, Bitcoin was nothing but Internet geek money and something to laugh at, but when Bitcoin’s price rocketed higher and higher, it suddenly became something else entirely:
Bitcoin’s furious rise scared the hell out of banks and governments everywhere. Banks saw their business models crumbling as programmable money took the world by storm and governments feared they might lose their iron-fisted control of the money supply. Authoritarian regimes raced to crush it. Regulators came out in force. The press unleashed a torrent of articles filled with fear, uncertainty and doubt.
But now as Bitcoin’s price recedes the frenzy of ignorance and fear will die with it and the community can get back to work.
If you’re new to the Bitcoin space, the last few months have been pretty crazy.
There have been some steep climbs and heart-stopping drops making for a roller coaster of emotion that’s not easily controlled. The price action is both thrilling and at times, painful, so it’s easy to lose sight of what you’re investing in. All the coins seem to be running together, so what’s the difference? How is one coin to be distinguished from another? And more importantly, how is an investor to know what the long term value of a coin will be?
In this article, I’m going to make the case for what makes Bitcoin different, how Bitcoin is a system that, despite all the cloning, has yet to be truly replicated.
To really understand the value proposition of Bitcoin, it helps to look at a bit of history. It’s tempting to think that the newest ICO or altcoin is the one that will finally “improve” Bitcoin and fix all of its problems and that Bitcoin will be relegated to the dustbin of history due to its lack of some “feature”. Indeed, nearly every altcoin, ICO or hardfork thinks that they’re being innovative in some fundamental way. What’s missed is that the biggest innovation has already happened.
Decentralized digital scarcity is the real innovation and Bitcoin was the first, and, as this article will make clear, continues to be the only such coin. All the other so-called innovations such as faster confirmation times, changing to proof-of-whatever, Turing completeness, different signature algorithm, different transaction ordering method and even privacy, are really tiny variations on the giant innovation that is Bitcoin.
It’s important to remember here that alternatives to Bitcoin have been proposed since 2011 and none of them have even come close to displacing Bitcoin in terms of price, usage or security. IxCoin was a clone of Bitcoin created in 2011 with larger block rewards and a premine (large number of coins sent to the creator). Tenebrix was an altcoin created in 2011 that tried to add GPU resistance and again had a large premine. Solidcoin was another altcoin created in 2011 with faster block times and again, a premine. About the only ones that survived (and not living out a zombie existence) out of that early altcoin era are Namecoin and Litecoin, which distinguished themselves by NOT having a premine.
Recently, in personal communications and small Telegram groups, I’ve noticed signs of quiet desperation growing as dreams of a quick reversal to new all-time-highs fade.
Meanwhile, Twitter is noisy with technicians, and egos attached to price predictions. Predictions are made with seeming conviction, because if right, egos will claim clairvoyance.
Here’s the truth: no one knows how far we’ll fall.
Certainly, we can make educated guesses based on technical indicators, and even predict points of support based on our early explorations of crypto fundamentals, but these are all educated guesses. Our techniques will mature over time, but reflecting on my career in the equity markets, everything will remain an educated guess. We’re predicting the behavior of humans, after all.
Some concrete numbers. If 2018 truly echoes 2014, then we could very well be in for another ~50% drop from here.
Upset that I said that? Already typing FUD!!!! in the comments? Wait until the end; discussing that reaction is the entire point of this post.
Hearings on Bitcoin and its derivatives are being held in the USA on a regular basis, and invariably the expert witnesses fail to properly describe the actual processes going on.
If they used the correct language and excluded all analogies, the only possible conclusion would be that America cannot regulate Bitcoin under its current legal system. The Constitution guarantees the inalienable rights of American citizens, and therefore Bitcoin is a protected form of publishing. The only way Bitcoin can be made regulable is if the Constitution is changed; and that does not mean adding a new Amendment, it means removing the First Amendment entirely. Inevitably the anti-Bitcoin protagonists will face a robust and ultimately successful legal challenge that will remove the possibility of any sort of “BitLicense” or interference from the CTFC, FinCEN or any other agency. It will also remove any possibility of interference at the State level. The consequence of adhering to the basic law of the United States will cause America to become the centre of all Bitcoin business for the entire world.
Let me explain why this is the case.
Some say that Bitcoin is money. Others say that it is not money. It doesn’t matter. What does matter are three things; that Bitcoin is, that the Bitcoin network does what it is meant to do completely reliably, and what the true nature of the Bitcoin network and the messages in it are.
Bitcoin is a distributed ledger system, maintained by a network of peers that monitors and regulates which entries are allocated to what Bitcoin addresses. This is done entirely by transmitting messages that are text, between the computers in the network (known as “nodes”), where cryptographic procedures are executed on these messages in text to verify their authenticity and the identity of the sender and recipient of the message and their position in the public ledger. The messages sent between nodes in the Bitcoin network are human readable, and printable. There is no point in any Bitcoin transaction that Bitcoin ceases to be text. It is all text, all the time.
Bitcoin can be printed out onto sheets of paper. This output can take different forms, like machine readable QR Codes, or it can be printed out in the letters A to Z, a to z and 0 to 9. This means they can be read by a human being, just like “Huckleberry Finn”.
At the time of the creation of the United States of America, the Founding Fathers of that new country in their deep wisdom and distaste for tyranny, haunted by the memory of the absence of a free press in the countries from which they escaped, wrote into the basic law of that then young federation of free states, an explicit and unambiguous freedom, the “Freedom of the Press”. This amendment was first because of its central importance to a free society. The First Amendment guarantees that all Americans have the power to exercise their right to publish and distribute anything they like, without restriction or prior restraint.
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
This single line, forever precludes any law that restricts Bitcoin in any way.
When most people think about earning money in crypto, they think of two common activities: investing and mining. Both can be costly and time consuming endeavours. But growing your cryptocurrency stash doesn’t have to be either of these things.
There are several less explored pathways to crypto-gains. In this article we’ll cover:
1. How your coins can work for you with Proof of Stake
2. How applications in this ecosystem can help you earn money
Let’s get started.
Getting started with Proof-of-Stake
Proof of stake is an alternative to cryptocurrency mining that doesn’t require hardware or crazy amounts of electricity. Instead investors who hold coins are gradually rewarded with more coins.
Think of it like interest in a bank account, but with cryptocurrency. All you need to get started is a proof-of-stake cryptocurrency and a computer
Major coins like NEO, LISK, and Stellar Lumens are built on proof of stake models. And other major coins like Ethereum have announced their intention to adopt it.
How can I use PoS to start making money?
You can use PoS today with nothing more than your laptop and a stable internet connection. Although, you’re going to have to let it run 24/7 so you might want to use an old laptop.
With the price of a bitcoin surging to new highs in 2017, the bullish case for investors might seem so obvious it does not need stating. Alternatively it may seem foolish to invest in a digital asset that isn’t backed by any commodity or government and whose price rise has prompted some to compare it to the tulip mania or the dot-com bubble. Neither is true; the bullish case for Bitcoin is compelling but far from obvious. There are significant risks to investing in Bitcoin, but, as I will argue, there is still an immense opportunity.
Never in the history of the world had it been possible to transfer value between distant peoples without relying on a trusted intermediary, such as a bank or government. In 2008 Satoshi Nakamoto, whose identity is still unknown, published a 9 page solution to a long-standing problem of computer science known as the Byzantine General’s Problem. Nakamoto’s solution and the system he built from it?—?Bitcoin?—?allowed, for the first time ever, value to be quickly transferred, at great distance, in a completely trustless way. The ramifications of the creation of Bitcoin are so profound for both economics and computer science that Nakamoto should rightly be the first person to qualify for both a Nobel prize in Economics and the Turing award.
For an investor the salient fact of the invention of Bitcoin is the creation of a new scarce digital good?—?bitcoins. Bitcoins are transferable digital tokens that are created on the Bitcoin network in a process known as “mining”. Bitcoin mining is roughly analogous to gold mining except that production follows a designed, predictable schedule. By design, only 21 million bitcoins will ever be mined and most of these already have been?—?approximately 16.8 million bitcoins have been mined at the time of writing. Every four years the number of bitcoins produced by mining halves and the production of new bitcoins will end completely by the year 2140.
This is not an easy letter for me to write. I have been a customer of yours for over 20 years. You were there with a loan for me when I bought my first car; you helped arrange the mortgage when I bought my first house, and you even helped me launch my first business. We have been through so much together.
And I’ll let you into a little secret?
You were my first! Don’t worry, I know I wasn’t yours. I think this is why this relationship means so much more to me than you.
You may not have noticed that our relationship has changed, you have been so busy since that big financial crisis that we are doing less together. I got my last loan from my supermarket as they had a better rate and my last mortgage from another bank. These days I am only using you to hold money for me and pay my bills.
We are like passing ships in the night and I am worried that if we don’t talk we might have to separate.
Recently I made this new friend called Bitcoin; a form of Cryptocurrency, I call her Crypto, you have probably heard of her. She is fresh and exciting, and I want you to get to know her too. I want you to make her part of our relationship.
I know I am neither a bank manager nor an economist and you have all these arguments for why Crypto will fail, but I am someone using Crypto in my daily life and I know that this is going to be an ever-increasing need for me, and I want us to share this experience.
I know you are scared, or maybe you just don’t understand it. Maybe you think Bitcoin is a Ponzi scheme and everyone buying it is only doing so to make a quick buck. Sure, some of us are, like some of us who bought shares during the Dot Com boom and lost money when it crashed. But look what happened after that, we got some of the most significant companies in the world: Amazon, Google and Facebook.
As Bitcoin and cryptocurrencies gain more and more media coverage, investors who have never been involved in crypto are increasingly asking the question of whether cryptocurrencies could provide meaningful portfolio diversification to the traditional portfolio asset allocation.
In order to answer this question one must look both backwards and forwards: backward looking to determine past correlations and risk-reward profile; and forward looking to understand the real risk of central bank policy mistakes and government debasement of fiat currencies.
Diversification of portfolio focuses on how the volatility of an underlying security plus their correlation with core market assets impacts a portfolio’s risk-return characteristics over the long-term or during periods of extreme macroeconomic or market stress.
The main reasons why Bitcoin provides portfolio diversification are: investability, politico- economic features, correlation of returns, and risk-reward profile.