Macroeconomics expert and former Goldman Sachs chief executive Raul Pal says that while negative sentiment in the crypto industry is at an all-time high, its fundamentals remain strong.
In a new interview with Impact Theory co-founder and host Tom Bilye, Pal says investor negativity is higher than he’s ever seen, including during the Great Recession and the bursting of the dot-com bubble.
11:50: “What we have is the peak of psychosis, because there was an earthquake and everyone became hypersensitive. I have never seen sentiment like this in my career, either in crypto or in the stock market. Twitter is so bad. I plotted relatively bullish, only marginally bullish, to say that the NASDAQ may have priced in a big recession. I should have had 100 comments of anger, how dare I suggest [that]?
Anger, resentment, fear at that moment on a scale that did not exist in 2008, did not exist in 2001. I’ve never seen anything like it.”
But Pal says the crypto space is optimistic as institutional investors increasingly embrace it, noting that big tech is becoming more intertwined with the crypto industry.
18:20 “Has anything changed in the crypto market? Nothing? Is technology being used? Solana just agreed to use her blockchain with Meta for NFTs (non-fungible tokens)? Yes. Does Google work with Solana? Yes. Has DeFi (decentralized finance) failed? No. Does the idea of a decentralized financial system work? Yes. Are cryptocurrencies exchanged in the value system on the Internet? Yes. Is the number of people in this ecosystem growing? Not much, because he is stabilized.
But if you look at the last cycle, from the peak of 2017 to the low of 2019, we lost about 80% of active wallet addresses. When I look at it now, we’ve lost about 30% because adoption continues to rise.”
Pal says investors should take a long-term approach to investing in cryptocurrencies, buying during panicked downturns and holding onto their holdings to see returns going forward.
19:20: “So it’s really a psychological game. And this is a long term game. We are not involved because we can make money within one or two years. We’re saying look, the bet here is if you hold and if you add to the bottom of the panic cycle and just keep holding and not leverage and just be smart about what you’re doing and don’t keep checking the market every day, probability [is] about how you came at the end of the decade and showed yourself in the future in a way that could probably be quite unexpected.”
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