Raoul Pal Warns Bitcoin Is A Mania, Not A Store Of Value... "I Sold-Out Last Week"

Tyler Durden's picture

Via MauldinEconomics.com,

The price of Bitcoin has risen by 210% since March to over $2,900… and one of the world’s most successful investment strategists is warning investors to stay away.

Speaking at the Mauldin Economics’ Strategic Investment Conference, Raoul Pal-author and publisher of The Global Macro Investor, an elite macroeconomic and investment research service—said Bitcoin’s explosion upward is mania.

Bitcoin Is a Bubble

The explosion [in the price of Bitcoin] is mania. It’s people looking for a rate of return. It’s in the bubble phase. [Bitcoin] goes through this periodically… it rises several hundred percent, and then collapses.”

In December 2013, Bitcoin ran up to over $900 and subsequently collapsed to below $250… it would take three years for the price to again reach those highs.

Source: Bloomberg

Exponential Moves Always Blow Up

Pal, speaking in an exclusive interview with Mauldin Economics, made ten-times his money on Bitcoin and thinks now is a good time to get out.

“This is the most exponential move we have seen. I don’t know how far it goes, but I sold out last week… and I’ve [owned Bitcoin] since it was $200. Anything that moves exponentially, always [blows up].”

However, Bitcoin’s meteoric rise isn’t the only reason The Global Macro Investor exited his position.

Only 21 Million Bitcoins? Not necessarily.

“Bitcoin was supposed to be a store of value, you couldn’t mess with the formula… and now they are talking about a ‘hard fork’ changing it?”

A feature that has attracted many investors to Bitcoin is its built-in scarcity. It’s widely thought that only 21-million Bitcoins can ever be ‘mined’ into existence.

However, senior developers and miners are now contemplating a ‘hard fork’ which would split Bitcoin in-two and allow for the creation of more Bitcoins.

“Even if they don’t change the formula, the fact that they could? That’s enough to say it’s not a long-term store of value.”

Pal says a recent development in India also changed his views on the crypto-currency.

Could “India Stack” Replace Bitcoin?

“India introduced a frictionless payment system, [something] that everyone in Bitcoin was working on… this was [Bitcoin’s] great project and India went and did it for 1.1 billion people, fifty-times faster than Bitcoin and its rolled out and working now.”

Pal is talking about “India Stack,” which will soon process more transactions than Bitcoin ever has.

India Stack allows users to open a bank account, mobile phone account, or share medical records at any hospital or clinic in India with your fingerprints or by retina scan.

In the March edition of The Global Macro Investor, Pal said of India Stack:

“This revolutionary digital infrastructure will soon be able to process billions more transactions than Bitcoin ever has. It may well be a Bitcoin killer or at best, provide the framework for how blockchain technology could be applied in the real world.”

What About Blockchain and the Future of Finance?

For Raoul Pal’s thoughts on the technology behind Bitcoin, the financial system, cashless societies, and more, watch the full interview below.

Download a FREE Bundle of Exclusive Content from the Sold-Out 2017 Strategic Investment Conference. Get access to exclusive interviews with John Mauldin, Neil Howe and Pippa Malmgren from SIC, an ebook from renowned geopolitical expert George Friedman and bonus SIC 2017 content… Claim your SIC 2017 bundle now!

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jamesmmu's picture

Breaking: Sean Spicer Fired!

Raffie's picture

Cool, more BTC for me.

Donald J. Trump's picture

Doubling bitcoin.  Didn't they effectively make bitcoin infinite by fractionalizing it?  Literally, an infinite amount of people can own a fraction of a bitcoin.

bamawatson's picture

this is the law https://www.youtube.com/watch?v=Uc5rar0GhIM

it has not changed, folks should recognize the Serious implications 

BaBaBouy's picture

The scary thing is that Anyone can start up a Blockchain and maybe a much better one...

Potcoin, Artcoin whatever Coin ... How many Coinz can the market digest...

nuubee's picture

Network effect picks a winner. Who that ultimate winner will be is yet to be determined.

Shift For Brains's picture

Should I therefore buy 500 crypto currencies now to assure a spot on the lifeboat?

Ahmeexnal's picture

Pussycoin is the one to have.

Drimble Wedge's picture

First crypto currency you can actually play the slots with.

Jim Sampson's picture

https://cryptonotestarter.org/

 

Sites like this is why I left Bitcoin years ago for the "Technology" and entered it as a speculative bet.

thisandthat's picture

This speaks for itself: http://mapofcoins.com/bitcoin - can you say clusterfuck?

I wonder if names like bitemecoin, or couldn't-be-more-aptly-named muppetcoin, are in that list...

tmosley's picture

Probably would have worked in the internet bubble era. The survivors went on to make huge gains--enough to make up for the losers that disappeared.

Of course, you could take the time to get informed on the relative merits of each, and perhaps limit your ownership to a handful while minimizing your risk.

bamawatson's picture

i don't necessarily accept this guy's theory; but he presents well & logically https://www.youtube.com/watch?v=91oot6hKbx4

MalteseFalcon's picture

"Network effect picks a winner. Who that ultimate winner will be is yet to be determined."

LOL.

Deep pockets and the deep state determine the winner.

The winner has been determined, you just haven't been told yet.

It won't be bitcoin.

seek's picture

Meanwhile take a look at who's backing Ethereum... answers a lot of questions. I don't think BTC goes away, however.

EHM's picture

MySpace enjoyed a network effect

mrtoad's picture

YES. This is called free market. If your coin or idea is shit no-one is going to use it and youout of the race.

dasein211's picture

So who wants to be part of a blockchain where your government controls your information-especially your medical info? That's why India shitchain wont work. Everyone saw what Modi did to the currency right? Just the government blockchain for everything. Maybe Ru Paul does but I sure ass hell don't.

GodSpeed_00's picture

I know right. I wouldn't be siging up for that INdia Stack bullshit if I was there, sounds like complete and utter government and bank control.

Winston Churchill's picture

Already 700+.Picking a winner from that field is impossible.

I'll repeat my previous comment.If we have open source bios and firmware for computers, and

only then, there might be a market for a crypto currency.Thats a lot of IFs.

Nobody has thought this thru',there are no secrets in computer world and until there are, this is just as bad

as keeping money in a bank.

Speculate all you want, but its no store of value as it stands.

sp0rkovite's picture

Ive made a couple of Raspberry Pi computers with all open source bios and firmware

Bunga Bunga's picture

So I just have to print my own Monopoly money and drop it from the Empire State Building and then it dilutes the value of the Dollar? Not really.

SILVERGEDDON's picture

Once all the approved hot money finishes coming out of China, Bitcoin's gonna go down harder than a 5 dollar whoere you gave a fifty dollar bill to. 

biloselhi's picture

///Didn't they effectively make bitcoin infinite by fractionalizing it?///

No. Dividing something doesn't increase the quantity of it, much less make it infinite. If I shave a gold bar into thousands of pieces, do I now have more gold? 

Bunga Bunga's picture

Fractionalizing could be done theoretically but won't work, simply because it needs the deposit of bitcoin for worthless IOUs in exchange. Why would any one do that? No one needs the utility of a bank for bitcoins nor can a bank pay interest pay on bitcoins.

BaBaBouy's picture

DANG, I was sure $50K was coming...

Crypto-World-Order's picture

and I thought 1900 gold was coming.............

Raffie's picture

G Selente said $2k gold by end of 2016.

Gold was in the $1100's. ROFL........... he was off a tad bit.

Crypto-World-Order's picture

Kirby said 8000 and polny said 20,000 at least we know both of these need to up their meds

Raffie's picture

PM will go up one day. However considering all the big players that been manhandling the prices not sure how far in the future it will be. In the mean time cryptos. I would be interested in a trip to Japan and only use Bitcoin. I think it would be fun.

jaxville's picture

  One day Bo's numbers will look conservative in hindsight.  Problem is he expects to see those numbers next month or next week.  If you have a couple oz of gold or a few tubes of silver eagles, you have a winning lottery ticket.

  The next attack on gold will be largely psychological as it will be in tandem will falling markets.  Deflation will be the word of the day as asset values plummet.   The paper markets will attack gold and may even lead to some panic selling.   The financial media will quote a price $200 lower in a single day.  The few who move to buy at the new lower price will find few offers.  Dealers in New York will be offering substantial premiums over spot.  An arbitrage play will end the hegemony of the commercials on the Comex. 

  The commercials will have their hands full in every other market they participate in and their gold short will be a side show.  Not a single financial entity will be safe due to leveraging, derivatives and swaps/clearing.  Gold will be hit hard off the bat and cash will look real good.It won't take long for folks to realize that cash is just a product of the failing financial system and gold is the one safe play outside the system.  You don't want to lining up to buy when that happens.

  This should have happened in 2007.  The financial sector pulled a lot of rabbits out of their arses.  I suspect they are out of rabbits and we are going to see something sooner than later that will make 2007 look like a picnic.

    You can sell now before the panic.  Or be patient and stay strong. 

Rabbi Chaim Cohen's picture

"G Selente said $2k gold by end of 2016."

If we didn't have physical pegged to a rigged and insolvent ETF metals market, it likely he would have been right, probably higher than $2k well before 2016. Selente made the mistake of assuming that any part the legacy markets were still organic. Everything was fully captured post 2008-2009, we just can't seem to accept this fact.

I expect that Crypto will suffer the same fate at some point. A winner will emerge, all others made illegal after a false flag and then it will also be co-opted by the Banksters and made to be another lever in the Kabuki theater of things...

SafelyGraze's picture

yet another fear-mongering diatribe about bitcon

first, the bitcon 21 million limit is guaranteed by a line of code containing that number

you can't change the limit without having to change a line of code, duh

and lines of code are not changeable

so that dispenses item one

regarding item two, bitcon is a store of value because you have to solve a real problem in order to miner the bitcon

that solution is like pure gold

let's say you solve the problem of factoring 21 into 7 times 3

that solution has value. that solution is a store of value.

you can pass the solution to your grandchildren.

it will still have value, because somebody might ask about factoring 21 and then you grandchildren would know the answer.

the answer, aka solution, is like gold in that it does not tarnish.

and that is why a bitcon will be valuable to your grandchildren.

in fact, even more valuable than now. because more and more people will want to know the solution to the problems that bitcon miners have solved, and that desire will further ratify the value of the bitcon

 

Helicopter Rides's picture

Subjective theroy of value is the only correct/scientific aproach to market values. Your excuse are just stupid. Proof of work isn't value.

 

Gold isn't valuable because people have gone nuts looking for it and mining it. That doesn't fucking matter. Reality doesn't give a shit about anyone's hardships. Value is related to actual and percieved utility and actual and percieved scarcity of the shit. BTC's worth will be determined by how popular it is.

 

Raffie's picture

USD is FAITH BASED that gold is backing it.

Gold is FAITH BASED that is has value and is wealth.

Bitcoin/ETH are FAITH BASED they are wealth.

Gold is rare and requires a lot of energy to obtain. Bitcoin is the same thing, the more it is mined the rare a coin is found costing more and more energy. Paper money is analog and crypto is digital so it is a logical step in economics to evolve.

Don't get me wrong PM is great, but will not be great till distant future when you will cash in for digital to use it. For PM to really show value extreme hyper inflation will kick in ($300 for a loaf of bread.. ok if that is what u want) our civilization will fall apart. BUT at least you have some wealth now at the cost of many lives.

Sometime in the 2020's they will figure out how to make all PM on a subatomic level. How valuable will your PM be then? Just something to consider looking at the tech we have now.

Art is whatever the powers that be say it is. The same applies to wealth and money.

dasein211's picture

Precious metals value goes to shit when we can get off the planet and mine asteroids. All metals do come to think of it.

Croesus's picture

@ Raffie:

You have a lot to learn, grasshopper.

Raffie's picture

I have always stood for PM and Cryptos.

You really gotta ask yourself, 'What kind of world will it be with $5k+ gold?' I don't think it will be pretty at all.

factorypreset's picture

A federal reserve note is a store of value only because there is some (albeit small) faith that one can exchange it for goods and services.  Same with PMs and crypto.  There is no "intrinsic" value in PMs or crypto any more than fiat currency has intrinsic value. That they exist doesn't give them "value".  That they even require resouces to be expended to get/create them doesn't give them "value". That block chain might be a super duper way to execute a contract doesn't mean diddly if the power goes tits up on one side of that transaction or if you have no use for the type of contract or transaction in question. If suddenly an alternate, less expensive metal is found that can replace silver in all the industrial applications for which silver is used does this make it any less valuable to the person who simply loves silver jewelry?

Again - the only ficking thing that gives value to PMs, or crypto or anything else for that matter is the value assigned by the people exchanging them.  Nothing more - nothing less. 

"Intrinsic" value is a completely meaningless term. 

factorypreset's picture

All of that said I am not smart enough to prognosticate what will be of value in the future or if/when the SHTF.  In my opinion it probably makes sense to at least hold some crypto if for no other reason than to understand how it works and how to transact in it should it become a major "currency" in the future  It probably also makes sense to be holding some PMs and maybe even some cash.  After that I imagine water, food, lead, a garden, soap/disinfectant, matches/lighters, whiskey/alcohol, coffee, etc...will all be of value in a post SHTF world. 

So all this technical/quasi-legal/pseudo-philosophical bickering about what's a "true" store of value, or whether or not something has "intrinsic" value is pointless.  Something has value if you value it.  There's no guarantee that you will value it in the future or that you will always be able to exchange it for something else you value.

 

Shift For Brains's picture

You have answered why BC may not change. You have not answered why a BC fork is not changeable.

With 500 crypto currencies out there and more on the way,  I think you may have more of a supply/demand issue than anything else.

What makes BC worth more than Brand Z? First mover? Investor base? Developer interest? 

The attraction of gold is that an investor/buyer anywhere in the world knows that assayed gold is ONE THING. What is the ONE THING that any one of 500 crypto currencies are? What is it you can say about each and every one that gives it fundamental, unalterable desirability?

mrtoad's picture

Yes. Thank you. and lets not forget the people who have thrown away computers with bitcoin stored on them, or have lost them in other ways. Like the guy who would be a millionaire if he didnt throw his computer out when they were $3. So there will be less than 21 million in existence. Each country can and are creating their own coin just like they do with paper currency now.

withglee's picture

[SR] new SafelyGraze Raffie Jun 13, 2017 5:43 PM

yet another fear-mongering diatribe about bitcon

first, the bitcon 21 million limit is guaranteed by a line of code containing that number

[T] Oh really? It has nothing to do with the number of bits in computer words and that kind of thing? Kind of a peculiar limit don't you think? I haven't seen the line of code. Surely you have if you make such a statement. Can you show it to us?

[SR]you can't change the limit without having to change a line of code, duh

[T] Again. Show us the line of code. Inquiring minds would like to see for ourselves.

[SR]and lines of code are not changeable

[T] Are they? If its an integral parameter of the algorithm that makes the block-chain non counterfeitable, than changing that number likely won't work. It will immediately break everything. Show us that line of code big guy.

[SR]so that dispenses item one

[T] Not for me it doesn't. Show me the code.

[SR]regarding item two, bitcon is a store of value because you have to solve a real problem in order to miner the bitcon

[T] Right. So if I put you in a Gerbil treadmill and hook it up to an LED you're creating real value, right? That's an attribute (that money must have value in and of itself) of gold being money that is dead wrong. Real money has "zero" value. The value is in the promise it stands for and is in the process of being delivered. That's how it works. It's "always" an in-process promise.

That was proven vividly in 1964 and 1965 when they took the silver out of our coins. The coins traded for the same stuff, before and after. Therefore the function of the silver in trade (i.e. in what money does ... enable trade over time and space) was zilch ... zero ... nada.

[SR]that solution is like pure gold

[T] Finally he gets it right ... like pure gold ...  no solution at all.

[SR] let's say you solve the problem of factoring 21 into 7 times 3

that solution has value. that solution is a store of value.

[T] Oh really? How many gallons of gas does that solution trade for? It's an easy test. Go to you gas station and try to trade it.

[SR] you can pass the solution to your grandchildren.

[T] Right, like the "improper" MOE (Medium of Exchange) process, with it's purposeful 2% leak and actual 4% leak was passed on to us.

Stupid is as stupid does.

[SR] it will still have value, because somebody might ask about factoring 21 and then you grandchildren would know the answer.

[T] With educators like you that's the only way they could get the answer. They sure couldn't think and come up with the answer. And they sure would be stupid after you schooling to think that answer is value that trades for a gallon of gas. Poor kids. We need to keep the likes of you away from them.

[SR] the answer, aka solution, is like gold in that it does not tarnish.

[T] Another non attribute of money is asserted by backhand

[SR]and that is why a bitcon will be valuable to your grandchildren.

[T] Right. Like someone else isn't going to come up with another worthless problem to solve and tell your children their god is better than your god. We've done religion before. We know how it works. Ask Copernicus ... and Bruno ... and Galileo.

[SR] in fact, even more valuable than now. because more and more people will want to know the solution to the problems that bitcon miners have solved, and that desire will further ratify the value of the bitcon

[T] Amazing none of them wanted the solutions to that problem nor were willing to pay anything for it before Bitcoin mysteriously came on the scene. Bitcoins only success is in its anonymity. Money launderers have to love it. But they just use it like quarters in the laundromat. When its done its job, they now have untraceable dollars or other improper MOE processed money that really does function almost like "real" money.

Institute a "proper" MOE process that guarantees perpetual free supply of money; perpetual perfect balance between money supply and demand and thus zero inflation; and zero interest to responsible traders.

Do that and all this nonsense goes away. Why? Because it drives out the money changers whose con will no longer compete. It drives out their governments whose counterfeiting is no longer tolerated by traders like me (and I'm reluctant to say ... like "you").

It's just that simple.

AGAU's picture

Withglee, are you also SafelyGraze by any chance?, lol, try to be less obvious X

AGAU's picture

Safelygraze I know you don't own any bitcoin, ask me why.