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We are about to go through the Bitcoin boom cycle. Expect 1 billion cryptocurrency wallets. JP Morgan, Goldman Sachs—they're all building on the blockchain rails. These are statements from a conversation I had with global macro investor Raoul Pal and Bitcoin billionaire Tim Draper. Tim is known for starting to buy Bitcoin at just four dollars, and famously bought tens of thousands of BTC in 2014. From the US Marshals Service. Raoul, previously a macro investor at Goldman Sachs, is the founder of Real Vision and the author of Adventures in Crypto. Collectively, Tim and Raoul have years of experience investing in cryptocurrencies and emerging technologies. So in this conversation, we'll discuss what showstopper concepts they've been investing in this year, how they've been diversifying their portfolios, and where they think the markets are headed next. Oh, and we also had to take the opportunity to ask them their price predictions for Bitcoin in 2024. This is a video that you don't want to miss. And this sounds like the, the perfect accelerator storm for, for 2024 to be the next big adoption market cycle. Raoul, I'd love to get your outlook on, on next year and some expectations for the crypto market, but also the, the macro economy that will go alongside that.

Sure. My view and my macro work was that the present state economy is bottoming right now. All the future forward-looking indicators all bottomed— global liquidity, global financial conditions, they all bottomed last year. And the market's priced in a recession then. We've still got markets that are cyclical pricing in a recession now, stuff like the Russell 2000, oil markets, commodity stuff, but really all the forward-looking stuff priced in a while ago. And it's been following financial conditions on a forward-looking basis. From all of the work that I do, I see nothing but stimulus coming this year. To Tim's point, there's, you know, stimulus is another word for debasement of currency. And they do it in a number of different ways. The worst one, the most pernicious one is the printing of money and putting it on the central bank balance sheet, using the balance sheet to buy debt, because what you're really doing then is pure debasement of currency. And most people don't understand what it is. They don't understand the fact that their purchasing power in asset terms goes down. So assets optically go up in value, because the purchasing power of the dollar versus scarce assets goes up. And, you know, crypto has been the best horse in that race. Technology has been particularly good at offsetting it. If you divide the S&P by the central bank balance sheet, zero performance since 2008. Gold, zero. In fact, gold is negative. Real estate, zero. It's only NASDAQ, only technology and crypto that's actually outperformed the debasement of currency. So it's really important what horse you back. So we're going into 2024. We've got sluggish economic growth. I I think inflation will continue to fall all year. Because I think structural issues within the economy, from aging populations to AI, will actually surprise people to the downside with inflation. So I'm not an inflation sticky person. There's different types of inflation, right? We're talking asset inflation caused by debasement of currency versus CPI inflation. In an election year, the government's job is to give out as much candy as possible to voters. They all they want to do is buy votes, you will always get stimulus. Since 2008, we had a great reset of the debt markets. Every major government hit 100% of GDP in debt by 2008. That's the Europeans, the Brits, the Americans, Japanese, Chinese. And what they all did was cut rates to zero in 2008. That was essentially a debt jubilee. It's like you don't pay the interest on the debt. That's really what it was. So if you don't pay the interest on the debt, what did they do? They all refinanced all of their debt. So it's 100% of GDP in debt. So all economic growth essentially goes to paying off the interest payments on the debt. So what you need to do is lower the interest costs of the debt. They did that. And every government reset their debt to 3 to 5 years. That 3 to 5 year cycle is the debt refi cycle. It's exactly how the economy has been working. So you come into year, year 4, it's the down year. That's when the economy slows because rates have gone up because they have to try and refi. What happens is rates then fall, they use the balance sheet, and they use the balance sheet to pay off the interest of the previous cycle. And I've kind of proven that out over time. That 4-year cycle is exactly the same as the Bitcoin halving cycle. Why? Because Bitcoin came in 2008. It's also the same as the presidential election cycle. Why? Stimulus, right? They're all the same thing. So it is the most observable economic environment of my 30-odd-year career. And it's so obvious what 2024 and 2025 are. And that's more stimulus. They're going to be cutting rates. If they screw it up and inflation does go up, they will use yield curve control, which is printing of money to maintain interest rates, which Japan has been doing. But generally speaking, it's a year of stimulus. In a year of stimulus, as investors, we need to say, okay, what's going to create the biggest opportunity set? The multiplier in all of this is crypto. It always outperforms all other assets, particularly in these moments. And crypto, again, is, is such a beautiful thing. This won't last forever. But it's a gift for us. Because you get 3 years where it's the best performing asset on earth. That's through macro crypto spring, summer, fall, crypto macro winter. When the downside of the debt refi cycle comes, it's the worst performing asset price on earth. And we just keep repeating, the lows are higher. It's just an exponential logarithmic trend that keeps going because of adoption. So the other thing to bear in mind about 2024-2025 is, okay, we've now built the ETF, which I think of as this trade deal between Crypto land and fiat world. It's not immigration into crypto land, because these people are using centralized counterparts to do this, as opposed to myself, who will use my Ledger device for self-storage. But we're going to bring a lot of FDI, foreign direct investment, and tourism income into crypto land, huge amounts of it, because of, because of the stimulus and the fact that it's the best returning asset price on earth. So we've got that To also ignite this crypto economy. On top of that, Tim and many VCs like him have piled money in, in 2020 and 2021. $67 billion went in. That money has been building applications layers, infrastructure layers, all sorts of stuff. Right? A lot of this will come to market. Some of it doesn't. Some of it failed in the down cycle. But there's a lot of stuff coming to market. And I— so how I look at this is this cycle, as we go from 516 million wallets to, I think, a billion and beyond in this cycle alone, that it's going to be an everything everywhere all at once cycle. All of the kindling is in place. The banks, all the asset management firms are both investors, but are also building on blockchain rails, all of them. So whatever Jamie says, and I've spoken to him directly about this, that he's wildly interested in this space. And they will, you know, JP Morgan, Goldman, everybody are building on these rails. The big brands are building on the rails for Web3. We're seeing a lot of that already in sports teams, car companies, luxury brands. I think the breakthrough of Solana compressed NFTs, allowing for a million NFTs to be printed for a minted for $100 means that allows ticketing and other breakthroughs of what we can use NFTs for, because NFTs are not just PFPs and stuff like that. In addition, the ongoing rise of stablecoins, that's basically a tokenized eurodollar market that allows somebody working in the rice fields in the Philippines to own dollars, which is impossible for them. And then just the ongoing adoption of crypto. So I know it sounds ludicrously bullish, but that's where we are in the cycle. I mean, I've been in this in crypto since 2012, and each time you just see it grow and grow and grow as more participants come and more use cases get built out. And you'll never guess who is in the car.

Hello and welcome back to GM Crypto. Now we have So much fun and exciting stuff coming up for you on today's show. But first, we need to talk about the Coin Bureau deals page, Guy.

That's right, Jessica, because it really is the place to find the very best deals in crypto.

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Well, just head on over to coinbureau.com/deals or use the link in the description.

Amazing. So these are your market trends. Tim, I would love to ask the same question to you because as Raoul mentioned, you have been flowing money in. We also saw this year the launch of the Web3 fund, Draper Gorham Blockchain. So what were some of the projects this year that really stood out for you? landed on your desk that you thought, wow, this is a real showstopper of a concept?

Well, I'm really pretty excited about Stacks. And the reason is, here's the way I looked at it. I watched the internet boom and bust and boom again. And And I watched how the software industry grew even before that. And Microsoft created this platform. And then everybody created all this software on that platform. And that platform included— then all these little companies created clip art and little games and paint.

Yeah.

programs and all sorts of things. And then there was this one, WordPerfect, that started to really rock, and Microsoft looked over there and then they created Word. And then there was another one called Lotus 1-2-3 that was a spreadsheet, and it was booming, and Microsoft looked over there and created Excel. And then they saw PowerPoint rising and they quickly bought it before it got too big. And they tried to get into it with money and they realized they couldn't do that. They probably eventually will have to buy into it too. But what happened was there was a platform and they let people do all sorts of things and then they chose the things that really mattered. So, I'm seeing sort of the same thing happen with Bitcoin as a platform. Sure, all the— a lot of the experimentation went on Ethereum and Solana and Tezos and whatever else. But now people are going, hmm, okay, so NFTs are a big deal, so we're going to create Ordinals on Bitcoin. Oh, okay, so DeFi is a big deal. Okay, well, we're going to have DeFi on Bitcoin. Okay, smart contracts are a big deal. We're going to move smart contracts to Bitcoin. I think that's happening, and I think there is a little bit— it's starting to happen— a consolidation around Bitcoin because, as a platform, because, um, I don't know if you noticed, but when Bitcoin was at $40,000 the last time, Ethereum was at $3,000.

Yeah.

And now Bitcoin's at $40,000 and Ethereum's at $2,000. And all the way down, the rest of the tokens are also smaller relative— most of them are smaller relative to Bitcoin, the differential. So, I think that there is this slow, steady movement toward all the important applications going on Bitcoin. So, I'm kind of looking— most of what I've been investing in, although, I mean, we'll look at all sorts of things, have been things that start to move the important applications over to Bitcoin. So, I think that that's a really interesting trend. We're thinking it's going to go very much the way Microsoft did. If you're a retailer, you don't say, I accept Tezos. You know, if you're, if you're buying, taking, getting your first crypto wallet, you don't say, oh, I want to, you know, I want to own some Cardano. It's, um, so there is real— I think it's just one of those things where the strongest brand. And, um, and then people said, oh well, Bitcoin moves slowly on the blockchain, blah blah blah. But then, and you know, all these great entrepreneurs that, uh, Raoul was pointing out, all that technology has moved. So now there's the Lightning Network, there's Stacks, there's— there are lots of things that are making it so that it is not an energy hog and it is not slow. Uh, in fact, with an OpenNode, um, I believe they can make transactions faster than the Visa network.

Wow.

So, I think that most of those old arguments are moving out and the new arguments of like, hey, let's standardize on Bitcoin are moving in. But we're open. We're open to seeing whatever else is out there. We're looking for all these new solutions. I'm a big fan of smart contracts. I can't wait. For the moment where I can raise all my investor money in Bitcoin, invest it all in Bitcoin, have them all pay their employees and suppliers in Bitcoin and their taxes and everything else, and have it all completely, um, accounted for, audited, whatever, without an accountant, an auditor, a bookkeeper, a transfer agent, or tax lawyer or whatever. This will be a— this new economy will be— will have far less friction, and I think that that's very exciting, and it's going to free accountants and lawyers and auditors up to do— doing more proactive work.

And I'm curious to ask both of you about your portfolio diversification, because I have a feeling they both might be slightly different. So maybe Raoul, I can start with you. When it comes to diversifying your portfolio, what kind of things are you looking at right now?

I'm a macro guy, and so I tend to take more concentrated bets. I'm not running other people's money. Yes, I have an asset management firm that invests in digital asset hedge funds that runs a diverse portfolio of hedge funds, because it's a fund of funds. But personally, when I see extraordinarily high-quality risk-return opportunities in an identifiable macro trend where I can build an investment framework, I tend to super concentrate. So then for me, it's, it's, it's a very concentrated bet. So I'm pretty much 100% crypto and have been for a long time now. And I make asset allocations about weightings. I don't really do, and I've tried it in the past to try and own a broader base of diversified base of tokens. I just end up with shrapnel in my wallet that I don't care about. I like to really focus on what I'm doing. So my big focus for this cycle is Solana. And I've been, that's been for the last year. Obviously, I have a lot of ETH, I still have some Bitcoin. And then I have a few other tokens here and there. But really, it's a very concentrated bet on what I think is going to be the breakthrough for this cycle. And so, yeah, I'm not diversified at all. So I'm a terrible human being, because I'm an investment guy, and I should have this broad diversified portfolio. I'm not at all. I'm a profit maximalist when it comes to the opportunity set, but a Philosophist when it comes to the opportunity set that this whole space provides everybody in the way that Tim said.

I love that.

And that's fun. What I have— it's really interesting, the venture capital business. I invest. In fact, we almost don't want to call ourselves venture capitalists. We kind of be founder capitalists or something because the venture community got— they were investing such huge amounts of money that they were kind of ruining our companies by saying, you know, oh, you need $10 million? Here's $100 million. And now, they're, you know, they're suffering the results of that. But in my business, I invest in a very diversified portfolio of seed investments, very early investments. And some of those trees grow and some don't. And the winners become very big and the losers or the other ones, they sort of fade away in our minds. And so, I end up with a very concentrated portfolio. So, it starts out incredibly diversified. We invest in any technology anywhere in the world where we think that there's a really interesting market that could happen. And so, our approach is a little bit different. People say, how can you be sure that a given investment is good? And I go, I can't be sure. But in a diversified portfolio, yeah, you can.

Tim, here's a question for you. How long does it take from, let's say you raise a new fund, you have a lot of seed investments, how long does it take before you see some of these trees really grow into something?

Well, it depends on the hurdle you give it to. I mean, when we fund them, it might be $5 or $10 million valuations. To get to a $100 million valuation is one thing, but that isn't quite enough for us to feel like we've done it. So, getting to a billion-dollar valuation or That might, so $100 million might take them 4 years, a billion-dollar valuation might take them 7 years, and a $10 billion valuation might take them 15 years. So we do have a little bit of a dilemma on when we've got a winner, do we distribute? That's an issue we have with our limited partners. I'm my biggest limited partner. So they kind of ride along with me, but I'm very sensitive to people's needs where they say, hey, I really need the money now.

Do you think we're going to get— sorry, Jessica, I'm asking questions.

No, please go ahead.

Please go ahead. Do you think we're going to get any decent exits in crypto in this cycle? Because we've had very few. We've obviously Coinbase, but, you know, there's quite a few larger businesses around. What are your views on that? Do we have to wait longer, you think?

You know, I think, um, Coinbase is going to grow, and I think, um, I think you'll probably see, um, I mean, there are quite a few that got pretty big and they didn't quite make it through the window this time. You know, I think, I mean, public companies are usually ones that have a dominant position in something that everybody needs. So that would be Ledger would have that. So that could possibly be a future IPO.

Circle, I guess.

Gemini twins, they might have something to go public at some point. But I think that they've got to shake through a few things before they do. And then, you know, what's interesting is there are some of these companies like Ripio or the one in Southeast Asia, in Singapore, Coinhako, that have gotten really big, and there is some question as to whether they go public or whatever. And then crypto by its nature is liquid, it's just some of these are companies that are doing things for crypto. So either you're, you're going for the gold or you're Selling.

Do you prefer the equity or the token, or you're indifferent?

What's that?

Do you prefer the equity or the token, or are you indifferent? Because, you know, as VCs, you get the opportunity to do either, both together, separately.

I like to align with the entrepreneur. So what that usually means is that we need to get— if we're investing in equity, we need to get the tokens if they come. So we want to make sure that we're, that we basically have the same relative interest as the entrepreneur does to both the equity and the tokens. That was something, boy, you know, I'm kind of good at asking the stupid questions and, you know, if I have one superpower, that's probably it. And I'm willing to go ahead and ask, now wait a second, how does that work? And I keep going and digging down, and when I saw these hypesters creating, oh, we're going to do this and we're going to do that, I would ask things like, you know, like to— I didn't ask SPF this, my partner did, but with some of the other centralized tokens that we saw. I said, okay, so you're going to lend— you're going to have people lend you their Bitcoin, and then what are you going to do with it? I mean, just asking that question, simple question, would have saved anybody from getting involved in Terra Luna, would have saved anybody from being in SPF. Just— but you have to kind of ask the stupid question, like Because these entrepreneurs do kind of, they have a way of sort of, you know, a shell. There was a shell game going on there for a while where then I realized, oh, this is sort of like they give you your equity and then they go ahead and they take the tokens, or they give you the tokens and they go ahead and they take the equity. And I, so I wanted to make sure each time we invest, we kind of go after both of them.

I think there have been a few exceptions to that. And obviously, it's fared very well for you as well. And I know that none of us here have a crystal ball, but looking at some of the fundamentals that we're seeing now, I would love to ask you—

I actually own 3, 4 crystal balls because in my show, I have this show, Meet the Drapers, and we interview entrepreneurs. And then, I ask all the guest judges, what do you think? And then, we go through this and I say, well, I'd love to speak up, but we're going to figure out who won this competition by going to the crystal ball. So, we have all these crystal balls. So, I actually do have a crystal ball.

That is the secret. So, if we all buy crystal balls, we will all be billionaires like Tim Draper. So I'd like to ask you both, when it comes to 2024 predictions, I've got some statements here that are open-ended and you can interpret them as you wish. But the first one, and throughout this conversation, some of you have mentioned stablecoins. Next year, what do you think the role of stablecoins will be? Do you think we will have a more reliant role in certain economies for stablecoins? Will we see an increase in usability? What are you expecting for next year?

Go ahead, Raoul.

So 87% of all world trade is in US dollars, whether anybody likes it or not. The US dollar is the single most important monetary thing. And really, dollars, they're restricted in who can get access to them. So if you're in Argentina, you have a problem trying to get hold of enough dollars. If you are in most countries, most countries have capital restrictions if they've got a weak currency. And the rise of stablecoins, it really shocked me because at first I just thought it was a liquid on-ramp and off-ramp into crypto. And I was speaking to some friends of mine in Singapore who run a big trading business there, QCP, and they were— they said, no, no, no, most of the business we see in stablecoins is from corporates. I'm like, what? It's like, yeah, Indonesian corporates trading with Chinese corporates. Because they don't have the settlement costs. They've both got capital restrictions. It takes a while to put the applications through. They just use this. I'm like, really? And then, you know, I get my haircut, and the guy here is Filipino, and all the barbers are all mad crypto punters. I'm like, why are you guys— why are the Filipinos so into crypto? He's like, oh, we all use stablecoins, because we have remittances, and we send money home to our parents. So we, we use stablecoins. And, you know, we want access to dollars. And it was— that trend is not going away. And the more people who can will, you know, you've got, don't forget, 2 gigantic economies where crypto is somewhat restricted right now, it'll reopen up, which is India and China, both want 1.3, 1.4 billion people. Both have currency issues in their own rights. So you can only think that this tokenized eurodollar market, which is offshore eurodollars, offshore dollar market, which is stablecoins, will keep growing. And so I would say, you know, Tim, one of the companies I think will likely be able to get an IPO window is Circle, for that reason. Good.

Fantastic. My answer to this is crypto. Oh, wait, back at the stablecoin question. The role of stablecoins, I think, will be a bridge to Bitcoin. And I think the way stablecoins will operate, they will be viable as long as the dollar is viable. And then when there's a run on the dollar, people will move to Bitcoin. But stablecoins make a lot of sense. It's an easy way to move things around. And certainly currently, and probably for, if this is just for 2024, I think it'd be a good year for stablecoins. And then it'll, but it'll be a bridge to Bitcoin.

And last but certainly not least, 2024 Bitcoin price prediction. I couldn't get you both on the line without asking you both your price forecast for one Bitcoin.

Don't give predictions anymore. Because you just get all you— there is no upside. All you get is abuse when you're wrong. There's nobody, nobody ever says, yeah, you were roughly right. Nobody ever says that. It's like if you get it wrong by $1, you're a complete moron. So I don't do predictions. I will just say Bitcoin will trade a lot higher at new all-time highs. Let's give it that.

Bitcoin will trade at 1 Bitcoin.

That's right. Oh, good answer. I like that one. You know, um, I sat on, uh, Fox Business News in 2014, and Bitcoin was trading at, I don't know, $600 or something. And I said it's going to be worth $10,000 in 3 years. And it hit that number exactly. Now that has been the bane of my existence. It was 3 years, $10,000 almost to the day, and then people keep coming back to me, well, what's the prediction now? I get people calling me, hey, well wait, no, but you said, you know, whatever.

You've got 4 crystal balls.

You know, but I had enough hubris to say Okay, I'm going to predict it again. When it was at $4,000, I said, okay, $250,000 in 4 years. What I didn't— when I predicted that, what I didn't expect was how fearful and, and just old thinking that the US would be. I thought we— because I think within— with a receptive US, we would be having conversations like the ones I have with the people from El Salvador. It's like, hey, you know, have you done a smart contract for this? Or have you, you know, is the blockchain used, you know, are you— is that thing blockchain secure or whatever. I think instead we say, oh, is that something that we can do? You know, we're sitting there doing that. And so, so I think all that is is a delay. I'd call it the fear delay, the, you know, old government delay. And, um, and I would say that we, that my number of $250,000 will probably come pretty soon. So, I'll stick with $250,000. We've already gone past my date deadline, so I'm wrong. I have never actually, um, discuss this with my crystal ball, but if—

You've got 4 of them, Tim. Certainly one of them's got to have the right answer. You need to ask it more questions.

No, we need to have like consensus of the crystal balls, but I'll say $250,000. I'll say it hits $250,000. Let's see, 2024. Yeah, I think it'll hit $250,000. I mean, it'll be a range though. I mean, I think though you will see $250,000. I actually think that if it hits $250,000, that it'll go way past it. But if it hits, you know, we are going through that cycle that Raoul was talking We're, I mean, we're going through the boom cycle. I think it—

Anything can happen. Anything can happen.

Yeah. I think this year, I think this year we might see 250,000.

Fantastic. Well, that's all for today's video. My thanks to Tim and Raoul for taking the time to speak with me. Now, if you learned something new, let us know by smashing that like button. If you want to keep learning, then subscribe to the channel and also ping that notification bell so you don't miss the next one. If you want to help others learn, then take a second to share this video with them. If you're inspired by Tim and Raul to start your investing journey, then you can check out the Coin Bureau deals page. It's got trading fee discounts of up to 60% and bonuses of up to $40,000 on some of the best crypto exchanges and the biggest discounts on hardware wallets. The link will be down in the description. Well, thank you so much for watching, and I'll see you all in the next one. This is Jessica signing off. Signing off.