Article source: FC Talk
For someone who has studied macroeconomics for 20 years in traditional finance, which coins will be bought in this cycle? Raoul Pal's answer is: allocate 90% of the money to BTC, ETH, SOL, SUI, DOGE. In the latest podcast, this 'financial veteran' shares his 'Crypto Millionaire Guide'—how to allocate assets and find potential coins. The highlights are all here. (1/)
Raoul Pal: The cryptocurrency market is in a 'banana range'. Raoul Pal began his career in 1990.
In 1997, he knocked on the door of Goldman Sachs, where he began working in hedge fund sales.
After five years, he went to GLG, responsible for managing the fund's investment portfolio until 2005. In the same year, he founded Global Macro Investor, providing quantifiable and easy-to-read research for the global macro investment community, up to today.
In addition, he founded a financial media platform, Real Vision, in 2014 to help its members understand the complex world of finance, business, and the global economy.
As a staunch bullish proponent of BTC, Raoul Pal judged long before the U.S. elections that liquidity was entering the market, driven by macroeconomic forces affecting all asset prices, but the performance of cryptocurrencies was particularly outstanding: the market would enter a 'banana range', where cryptocurrencies typically rise vertically.
As an investor, the simplest approach is to allocate the majority of assets in major cryptocurrencies, maintain a core investment portfolio, remain patient, and eliminate external noise. (2/)
BTC VS ETH VS SOL, which will have the highest growth?
Raoul Pal believes that the cryptocurrency market cap in this cycle will reach $10 to $15 trillion, compared to the current (at the time of the interview) $2.2 trillion, potentially growing 5 to 7 times.
He also believes that SOL's performance will exceed ETH, and ETH's performance will exceed BTC: BTC will likely increase 3-4 times, SOL could grow 8 times or more, while ETH will be somewhere in between. In terms of asset allocation, Pal's general rule is to invest 90% in mainstream assets and 10% in others.
However, at some point, one or several 'new products' will be selected, and more bets will be placed on these 'new products'.
For instance, he might allocate 25% to Sui and 65% to others.
Regarding Memecoins, he stated that considering Memecoins are still in the early stages, he has only allocated a small part of his capital to 'bet' on them and does not want to go too big. (3/)
Why is there optimism for SOL, Sui, and Doge?
In July 2024, Pal announced on his YouTube channel that 90% of his personally held cryptocurrencies are invested in SOL, reasoning that: despite the significant price volatility of SOL, it has shown extraordinary resilience.
Solana has a good community, excellent user experience, outstanding technology, the ability to issue low-cost NFTs on-chain, and fast transaction speeds. The explosive growth of Memecoin is also one of Solana's breakthroughs in chain use. The ecosystem is accelerating its growth, similar to what ETH experienced in the last cycle, which is why he believes SOL is a low-risk area and a good place for substantial investments.
Besides Solana, Pal is also optimistic about Sui and Doge.
The choice of Sui is due to its innovative technology and superior performance in the market compared to other major cryptocurrencies like Solana and Ethereum.
Price performance is also very important; only when Sui's price performance exceeds the overall performance of other cryptocurrencies does Pal feel confident that Sui may be a 'new product.'
The choice of Doge is due to: Doge's strong cultural identity and international recognition, which includes broad community support. Elon Musk's support for Doge is also a significant factor, as he has the ability to promote Doge's development through his social media influence and actions.
Additionally, based on Doge's trading charts and historical performance, it experiences a massive price fluctuation at some point every four years. This cyclical performance is part of his investment decision-making.
In his view, Doge is the Solana among Memecoins. (4/)
How to discover potential tokens?
Pal put forward a viewpoint: scarcity does not lie in tokens but in attention. The real game is capturing attention.
Therefore, the key to discovering potential assets lies in identifying projects that can attract market attention and liquidity. This often involves analyzing macroeconomic trends, such as changes in monetary policy and global events, which can impact asset attention. This token screening theory applies equally to Memecoins. For Memecoins, the most critical thing is to understand the cultural significance and community acceptance of Memecoins. One should invest in Memecoins that resonate with a broad audience and have strong community support.
Pay attention to community conditions, including social media, price dynamics, and market sentiment. Look for assets that can attract investor attention when prices are stable or increasing; these assets may have the potential to become the next big hit. (5/)
What are the differences between this cycle's Memecoin and last cycle's NFTs in terms of their popularity?
Although holding a certain amount of Memecoins, Pal believes that Memecoins are more about trading and investing, usually associated with specific communities or cultural phenomena, with their value partially derived from the sense of recognition and participation among community members.
They may rapidly appreciate due to community enthusiasm, but there is also a risk of quickly losing value.
NFTs represent a whole new asset class; they are not merely imitating existing cryptocurrencies but constitute a brand new infrastructure of the internet. Their value lies in their uniqueness, scarcity, and cultural significance, serving as proof of ownership for digital art and collectibles, providing new opportunities for wealth accumulation across generations. (6/)
There is not much time left for everyone to make money. Pal pointed out that the market cycle is very urgent, with possibly 6 to 8 months left to make profits. This means that before the market peaks, investors need to adjust their capital risk ratio correctly: assuming the market reaches $12 trillion, your major asset proportion should earn the same amount as the market growth. If that's the case, you have done it right. If your asset's 1% increases by 100%, no matter what it is, and other portfolios increase by x, if they ultimately all keep pace with the market, then you have mastered risk-adjusted returns.
Pal's advice is to find a balanced investment portfolio, where a high-risk asset is paired with a low-risk asset. For example, Pal believes Solana is a relatively safe top-ranking asset, while Sui is a newly chosen high-risk asset. If the market grows rapidly, SOL will grow to become one of the top three tokens, and Sui will make it into the top ten.
Similarly, in the Memecoin field, Doge is a safer asset, while other Memecoins carry higher risks.
Observe different cycles and look for tokens that maintain vitality, rather than FOMO. (7/)
"Doom sales, optimism makes money" In summary, Pal emphasized three points regarding his investment in the cryptocurrency market:
Establish connections with the community, keeping in mind the importance of value and community in investments rather than short-term profits.
Tokens are not a game of scarcity, but of attention.
Concentrate investments in a relatively safe asset and hold on, gaining asset appreciation alongside market cycles; use a small amount of assets to bet on riskier tokens, choosing 'new products' based on macroeconomic conditions, community situations, technological innovations, ecosystem development, and token developments.
Finally, Pal also mentioned: "Doom sales, optimism makes money" In the finance field, historically successful investors (legends) often profited by predicting and capitalizing on market downturns, buying during market declines and selling before the market recovers, thus realizing profits.
Because most of the time, everything will turn out fine; humanity will not self-destruct, central banks and governments will take measures to prevent significant market declines, and technological advancements are improving our lives and creating more wealth. Although the market will experience cyclical fluctuations, in the long run, the market tends to grow upwards. This understanding tells investors to seek buying opportunities when the market is down rather than panic-selling. (8/)
