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Raoul Pal says Bitcoin is the best reserve and collateral asset ever

Photo of: Janeth Diamond
by Janeth Diamond

Global Macro Investor, CEO Mr. Raoul Pal says Bitcoin (BTC) is the best reserve and collateral asset ever created. Following a news report on which the leading cryptocurrencies are, Pal, a former hedge fund manager at Goldman Sachs said that he believed BTC  featuring a permanent finite supply is perhaps the hardest form of money created. He also believes that BTC in comparison to Gold posits as a stronger and a much superior reserve asset because of its decentralized nature and provable transaction history. 

Global Macro investor is an independent, thought-provoking research publication that has a restricted paid membership in a bid to surge its value to its members. Apart from being known for the unique market and economy analysis and trade recommendations, Raoul also holds great experience in running a successful global macro fund. Due to this, the members of the GMI club get great insights into issues facing the macro investment industry and also helps in creating a framework that would help them to plan for the future. GMI also offers investment advisory services to family offices in investment implementation, risks analysis, and wealth management.

Back in 2008 Pal had predicted the imminent financial crisis that year. In his analysis of the current macroeconomic condition government bonds feature as the bottom of the pyramid both in terms of being collateral and the US Treasury. According to him,

“That used to work just fine until the central banks became fearful of allowing the business cycle to run unimpeded. Thus, when debt loads became unsustainable, meaning that the weakest borrowers couldn’t get access to enough collateral, instead of the price of collateral rising, thus forcing firms to go bust, central banks began to increase the supply of collateral and reserves (quantitative easing).”

As a result, there is a collateral devaluation for a longer stretch of time leading to debt spirals, but Bitcoin on the other hand faces no such problems because it is very transparent and clear collateral. It has a great blockchain ownership structure that reduces the imminent risks of who owns it. The best part is that it is recorded and provable. Pal notes that all the BTC has to become the leading form of collateral becoming a yield curve indicating future value which already is prevalent in the breakout of DeFi. He said that the DeFi revolution is doing just that which is establishing a forward curve of future value. Currently, it is functioning at a money-market phase but over time they will establish the time preference for Bitcoin over 30 years or more very much on the lines of bonds. 

Early this year, Pal also suggested that Bitcoin has the potential to surpass $ 1 million in the next three years to five years, making it the biggest trade of all time. In 2008 Raoul had also helped design the TV program called Million Dollar traders for the BBC in which he trained the participants in investment and risk management strategy. He also has several articles to his credit.