Raoul Pal

Paul Tudor Jones' 2% Bitcoin position is a 'massive amount'

Shaan cites credibility signals driving his Bitcoin conviction: Raoul Pal moving 90% of his net worth into Bitcoin, and billionaire Paul Tudor Jones taking a 2% portfolio position — which at his scale is an enormous amount of Bitcoin.

“You see that Paul Tudor Jones, the billionaire hedge fund guy, said he's accumulated a 2% position in his portfolio of Bitcoin. 2% for Paul Tudor Jones is a massive amount of Bitcoin.”

Metcalfe's Law: crypto marries the network owner to the network user

Raoul Pal's core thesis for valuing crypto: networks grow in value by Metcalfe's Law (value scales with connections between users). Unlike Facebook, where shareholders and users are separate, crypto aligns owner and user, stacking network effects on network effects.

“once you realize that crypto on networks where you actually own the network. So Facebook is a great network stock, and it works perfectly on a log chart, and it's an exponential, does all the things as you imagine. You can value it in Metcalfe's Law terms. But the fundamental difference is shareholders and network users are not aligned. The shareholders make the money, the network users get the utility. Along comes crypto. You marry the network user with the owner. Okay, now you've got network effects upon network effects.”

Steal thisValue any crypto network by Metcalfe's Law and ask whether owners and users are the same people; if they are, expect compounding network effects.

Raoul wrote a 35-page monthly newsletter in one weekend a month from a Spanish mountainside

After retiring from his hedge fund, Raoul Pal ran Global Macro Investor as a part-time job, writing the whole monthly publication in one weekend while living the beach life in Spain. He eventually felt isolated because no one around him cared about global macro.

“I was writing Global Macro Investor. But that is a monthly publication. So, I don't know why all of you guys do weekly newsletters or daily newsletters. That's hard work. So, I wrote monthly. It's big. It's like, well, it starts off at about 35 pages a month. And then due to inflation, it gets to about 130 pages a month now. But I write it in a weekend.”

Live in the future, then look back to find the path

Raoul Pal's mental model for ambition: rather than standing in the present trying to move forward, he imagines his future self and then reverse-engineers how he got there. He says it's psychologically much easier to map a path backward from a vivid endgame.

“I kind of live in the future always in everything that I do. So, I always have a vision of my future self, or whether that's future state of financial markets, where I think it's going, whatever it may be, I'm always well ahead. And so I then can look— it's much easier to live in the future and look back and say, how do I get here, than stand here today and go, I want to go forward.”

Steal thisPicture your future self vividly, then work backward to map the steps to get there instead of guessing forward from today.

Crypto compounds because the network owner and network user are the same

Raoul Pal's core insight: Facebook obeys Metcalfe's Law but its shareholders and users are misaligned (owners make money, users get utility). Crypto marries the two, stacking network effects on network effects.

“But the fundamental difference is shareholders and network users are not aligned. The shareholders make the money, the network users get the utility. Along comes crypto, you marry the network user with the owner. Okay, now you've got network effects upon network effects.”

Crypto compounds because the network owner and network user are the same

Raoul Pal's core insight: Facebook obeys Metcalfe's Law but its shareholders and users are misaligned (owners make money, users get utility). Crypto marries the two, stacking network effects on network effects.

“But the fundamental difference is shareholders and network users are not aligned. The shareholders make the money, the network users get the utility. Along comes crypto, you marry the network user with the owner. Okay, now you've got network effects upon network effects.”

Bitcoin is a one-sided network; Ethereum is the internet

Pal's bet thesis: Bitcoin is a one-sided store-of-value network with few applications, while Ethereum has users, connections, and apps built on top, making it the superior adoption bet that he shifted his majority into.

“Well, Bitcoin's a one-sided one, which is a bunch of people own it as a store of value, like gold, nothing wrong with that. But there's not many applications built in it. When you look at Ethereum, it's like, holy shit. I mean, this is like the internet. That moment is like, okay, this is far superior of bet.”

Buying a $250K Spanish house in cash meant 'I'd won the entire game'

Raoul Pal bought a 6-bedroom Spanish hillside house outright with a Goldman bonus. Owning a place he could retreat to (and survive on even working a bar) made him feel the game of life was won, which freed him to take bigger career risks afterward.

“It was game-changing because now I'd won the entire game. I've got a 6-bedroom house on a hillside in Spain overlooking orange groves, 10 minutes to the beach. And I could lose my job.”

Earning over $1M a year at 30 selling derivatives to hedge funds

Raoul Pal credits riding three megatrends at once (banking, derivatives, and hedge funds) for outsized early earnings. By 30 he was making more than $1 million a year at Goldman.

“So, these are the megatrend of finance, the megatrend of derivative, and the megatrend of hedge funds. So, I was doing pretty well. At 30 years old, I was earning more than $1 million a year.”

Equity comp is 'worthless' if it's not money you can spend

Raoul Pal repeatedly told his Goldman boss he'd rather have cash than restricted stock and options. He lost millions walking away from un-vested equity to join GLG, but his boss later admitted he'd been dead right that the equity was worthless.

“He used to give me share options and restricted stock. I'm like, thank you, it's worthless. I'd rather have cash. He goes, how dare you? You should be proud to have equity in Goldman. And that's why we can give you so much more compensation. I said, it's worthless. He said, why do you say that? I said, because it's not money I can spend.”

Assume you're a total idiot, discount your estimate 90%, then check the price

Raoul Pal's bet-sizing heuristic for Bitcoin at $200: he estimated fair value near $1M via stock-to-flow vs gold, then assumed he was wrong by 90% (worth $100K), and the price was still only $200. That asymmetry made it the best single bet he'd ever seen.

“And then how I like to look at things is, okay, what's the price now? $200. Let's assume, probably rightly, that Raoul is a total idiot. So, let's assume he's wrong by 90%. So, it's worth $100,000, and it's at $200. That is the best single bet I've ever seen in my entire life. So, I bought it.”

Steal thisEstimate an asset's fair value, then haircut your own estimate by 90%; if the asymmetry vs the current price is still enormous, that's the bet.

He 10x'd on early Bitcoin but a divorce became his 'voluntary 50% tax'

Raoul Pal sold his early Bitcoin after a 10x, a good but not life-changing bet. He got divorced in the process, halving the gain, which he jokes was the 50% tax he doesn't otherwise pay in the Cayman Islands. Holding to $20K would have been life-changing.

“A decent enough amount. And I sold it after a 10x. So, I'd done well from it. Sadly, I got divorced in the process. So, I halved that. So, there was my tax that I don't pay in the Cayman Islands. I chose a voluntary 50% tax. So, it wasn't a life-changing bet, but it was a good bet.”

Bitcoin is one-sided; Ethereum is 'like the internet'

Applying Metcalfe's Law, Raoul Pal argues Bitcoin is a one-sided store-of-value network with few applications, while Ethereum has users, connections, and applications built on top, making it a far superior bet. That realization drove him to shift the majority of his holdings into Ethereum.

“Well, Bitcoin's a one-sided one, which is a bunch of people own it as a store of value, like gold, nothing wrong with that. But there's not many applications built in it. When you look at Ethereum, it's like, holy shit. I mean, this is like the internet. That moment is like, okay, this is far superior a bet. And so, that's why I took that bet.”

Digital asset space goes from $2T to $200T (100x) over 10-15 years

Raoul Pal predicts the total digital asset market cap will reach roughly $200 trillion, a 100x from its then-$2 trillion size, as the network flattens out. He frames it as something the market has never had before.

“So, even when the network flattens out and is now worth, I think, $200 trillion for the digital asset space, it's currently $2 trillion. That's 100x in market cap. That's huge. We've never had anything like this before.”

A network that rejects newcomers will underperform

Raoul Pal changed his mind on Bitcoin not as an asset but as a network: he saw the community actively rejecting new participants, and since a network's job is to attract new users, he concluded it would underperform. Institutions turned off by the culture started buying ETH instead.

“And I thought the community is not attracting new people. And the job of a network is to attract new participants. And if the network was actively rejecting people, I thought it's going to underperform, which was surprising to me because I was very bullish on Bitcoin first because I thought, look, it's going to have a larger place.”

Institutional crypto money 'comes as a flow, not a tidal wave'

Raoul Pal, who pitches crypto to investment committees of the world's largest institutions, says the expected 'wall of money' never arrives as a tidal wave; it arrives as a flow you only notice in hindsight. He watched the narrative move fast from Bitcoin to Ethereum to Web3, which is why VCs captured most of the money.

“Because people keep coming to me saying, when's this wall of money? I'm like, it doesn't come as a tidal wave. It comes as a flow. You don't see it until you look back and go, wow.”

Don't risk a 10x asset for a 5% yield

Raoul Pal refuses to stake or yield-farm his ETH because the small chance of getting rugged, hacked, or losing it isn't worth a 5-15% yield when his expected future return on simply holding is 10x. Once you've won something, you don't let anyone take it away.

“Because if I was staking, I get what, 5% yield, or if I'm really clever and I mess around in deep DeFi, I'm getting like a 15% yield. And then I get rugged, or something goes wrong, or it's on an exchange that gets hacked. That's not the risk I want to take. It's not worth it if my expected future return is 10x. Why take, why get a 5% yield? It's nonsensical.”

Steal thisNever risk a multi-bagger core position to chase a single-digit yield; the asymmetry runs the wrong way.

Middlemen take 80% of music economics; Snoop made $50M direct via NFTs

Raoul Pal argues record labels and middlemen capture 80% of music's economics, forcing artists into exhausting tours to make real money. Selling directly to fans via NFTs and social tokens let Snoop Dogg make $50 million on small numbers he could never have reached through traditional channels.

“He's just not that big a star because record labels because 80% of all the economics of selling music gets taken by middlemen.”

Middlemen take 80% of music economics; Snoop made $50M direct via NFTs

Raoul Pal argues record labels and middlemen capture 80% of music's economics, forcing artists into exhausting tours to make real money. Selling directly to fans via NFTs and social tokens let Snoop Dogg make $50 million on small numbers he could never have reached through traditional channels.

“He's just not that big a star because record labels because 80% of all the economics of selling music gets taken by middlemen.”

Token holders are unpaid marketers: every believer becomes a marketer

When fans own a song's IP rights, they're financially incentivized to make it a hit, producing hundreds of TikTok videos and marketing it for free because they share the upside. Shaan extends this: it's why Bitcoin needs no CMO or ad budget; the network turns every believer into a marketer.

“Right. And if you multiply that by all of the token holders of those IP rights, they're all marketing free for you because they get paid in the upside. It's genius.”

Real Vision Crypto: free weekly interviews with crypto's best

Raoul Pal points listeners to realvisioncrypto.com, a free crypto channel where he weekly interviews leading people across social tokens, music, and macro.

“I've set up an entire free crypto channel, which is realvisioncrypto.com. It's all the great and the good of the entire industry. Every week, I interview who I think are the people I really want to pick the brains of. And I go down all these journeys of social tokens, and music, and macro, and all of this stuff. So, there's so much there. And it's free, realvisioncrypto.com.”