Bitcoin, An Amazing Bet
According to Raoul Pal, a former hedge fund-centric executives at massive investment bank Goldman Sachs, recently lauded Bitcoin. Speaking on Stephen Livera’s podcast, the current chief executive of Real Vision — a financial media source looking to democratize access to market insights — claimed that he believes that BTC is a perfect asymmetric bet, one of the best seen in decades.
“If it’s a 1% chance of being right and the upside is 100x from here, you’d do this all day.”
The former banker then noted that buying Bitcoin now is like buying equities and bonds in 1982, which is prior to the massive bull run that has erupted since.
He continued, explaining that if Bitcoin has the potential to, say, absorb $80 trillion of wealth (likely from M1 base monies, something like real estate, and gold), even investors that are only 1% sure that this could happen have 400% upside from current prices:
“So if it’s worth 80 trillion dollars, let’s say you have a 10% probability, that’s 8 trillion dollars. It’s currently worth 200 billion dollars. So even if there’s a 1% chance of it working out… BTC is ludicriously underpriced.”
All this corroborates the sentiment of many cryptocurrency analysts that Bitcoin is the asymmetric bets of asymmetric bets, meaning that it has copious upside potential for relatively slim downside.
On the matter of why Bitcoin has (growing) value, Pal made reference of stock-to-flow models from PlanB, which he claims are derivatives of wireframe models he put forth when he wrote about BTC in 2013 or 2014 in a research letter. For those who have been living under a crypto rock, PlanB is a prominent statistician that hails from traditional markets who has popularized a model that states that with each halving, Bitcoin’s “fair value” increases dramatically, often on orders of magnitude. What’s crazy is that most of his models fit BTC’s historical price action to a near tee, implying that should Bitcoin continue to be valued due to its scarcity, there is crazy upside in the future.
Recession is Brewing
Pal’s statement in support of Bitcoin and cryptocurrencies comes as he has begun to let his thousands of followers know about the potential recession brewing.
Over the past few months, many of his tweets have begun to blow up in the macroeconomic and cryptocurrency Twitter spheres. In them, he touched on the fact that European banks have begun to spiral, certain growth indicators have begun to slow, and other key facts that accentuate that the economy isn’t being well represented by the booming stock market. At one point, he even claimed that he is personally buying Bitcoin, gold, and other assets deemed “safe” to mitigate financial risk in these trying times.
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