Here is a brand new video where Raoul Pal of Real Vision describes his macro thesis for crypto investing to Keith McCoullough of Hedgeye investing. The interesting thing is each crypto is analyzed according to its Network propeties and each crypto’s topographical growth follows Metcalfe’s law, which states the value of a network is proportional to the number of network participants squared. This means BTC which was founded in 2009 laid down an exponential fractal pattern as it grew. The fractal pattern matched the growth of the internet. The fractal pattern of 150M internet users (late 1990’s) matched the fractal of 150M BTC wallets (April 2014) and that 150M fractal was repeated for Etherium which was launched in 2015 and acheived 150M wallets in April 2017. This means ETH is laging BTC growth by about 3 years.
What’s interesting is growth in these assets follows a mathematical narrative. Raoul recognized this and he calculates the growth around 113%/yr, the most robust adoption of any asset in history. He also recognized that if you divide asset growth like stocks, bonds, commodities by the size of the FED’s balance sheet, the only asset class that is actually growing is crypto. Assets like stocks, while growing in value in the numerator are shrinking in value in the denominator by about as much as growth. This means in terms of “value” these asset classed are basically flat. Your stocks go up 15% but those stocks are devalued by 15% when compared to FED balance sheet expansion. Crypto is the only asset class that is growing exponentially faster than it’s debasement by money printing. Raoul’s portfolio is now mostly (75%) ETH with a small (5%) BTC stake and a 20% basket of other tokens. My portfolio is 55% BTC 40% ETH and 5% “other” and all assets are multiples in the green. ETH is my best performing asset this year, up 32x in 18 months or so.
The asset class is about 2.5T dollar market cap, and Pal argues the class in the next decade should acquire a 250T market cap, on a par with stocks and bond market caps roughly speaking.
Without further adieu: