Keynote speaker - Raoul Pal, CEO & CIO EXPAAM
Summary
The speaker Raoul Pal presents a comprehensive macroeconomic framework to understand the cryptocurrency market and broader economic trends, emphasizing the importance of patience and a long-term perspective. He refers to himself humorously as a “hopeopium dealer,” aiming to inject optimism into investors overwhelmed by short-term volatility and narrow time horizons. The core message is that crypto assets, particularly Bitcoin and altcoins, are fundamentally driven by macro factors—not mystical or isolated cycles—and the interplay of demographics, debt, liquidity, and business cycles.
Key Insights and Core Concepts
- The Everything Code Framework:
A macroeconomic model developed by the speaker over decades and finalized in 2022, combining population growth, productivity growth, and debt growth as drivers of economic growth.- Population growth is declining globally, especially in Western countries, Japan, and China, causing a shrinking labor force and structural economic contraction.
- As the labor force shrinks, debt-to-GDP ratios rise inexorably, a key structural problem forcing governments and central banks to monetize debt through money printing.
- Debt and Liquidity Dynamics:
- Debt issuance since 2008 at near-zero interest rates has created a debt maturity cycle that drives economic and market cyclicality.
- The current debt cycle lengthened from 4 years to about 5.4 years due to extended debt maturities and interest rate dynamics.
- Liquidity injections and money printing are essential to service the growing debt and interest payments, with an estimated $8 trillion liquidity injection expected in the next 12 months.
- Liquidity is the dominant macro factor influencing all asset classes, including crypto, stocks (NASDAQ), commodities, and small caps.
- Crypto as a Macro Asset:
- Crypto markets, including Bitcoin, altcoins, and Ethereum, mirror the business cycle and liquidity conditions rather than existing as isolated or mystical assets.
- Market cycles in crypto are tied to debt maturity and liquidity cycles, with a high correlation to macroeconomic indicators like the ISM survey and financial conditions indexes.
- Altcoin seasons and Bitcoin dominance follow the risk-on/risk-off behavior driven by earnings growth and liquidity availability.
- Current Market Environment and Outlook:
- Recent liquidity disruptions, including the U.S. Treasury refilling its general account and government shutdowns, caused temporary liquidity drains leading to crypto underperformance relative to NASDAQ.
- Crypto is furthest out on the risk curve, so it is hit hardest by liquidity contractions but benefits most when liquidity returns.
- Regulatory and banking changes, such as relaxing the Supplementary Leverage Ratio (SLR), may enable banks to inject trillions in liquidity, supporting a market rebound.
- The cycle is expected to peak around late 2026, not 2025, as liquidity injections and debt rollovers accelerate.
- Mega Trend and Long-Term Opportunity:
- The speaker highlights the massive wealth creation potential in crypto: currently a $3 trillion asset class within $880 trillion of global assets and $30 trillion in gold.
- Based on long-term extrapolations, crypto could grow to a $100 trillion asset class by 2032–2034, representing only 3% of the total potential market penetration today.
- This growth implies the creation of roughly $97 trillion of new wealth, far exceeding the wealth of the richest global individuals and regions combined, but distributed globally and accessibly.
- Patience, risk management, and holding tokens long-term are emphasized as the best strategies to benefit from this macro-driven, compounding wealth creation.
Timeline of Key Events and Cycles
| Year/Period | Event/Trend | Notes |
|---|---|---|
| 2008 | Start of zero interest rate debt issuance | Created 4-year debt maturity cycle |
| 2022 | Debt cycle maturity extended to 5.4 years | Interest rates near zero again; cycle lengthened |
| 2023–2024 | Liquidity disruptions due to Treasury account refill and government shutdown | Caused crypto underperformance and liquidity drain |
| 2025 (expected) | Initial debt rollovers and liquidity injections | Delayed cycle peak due to government shutdown and other factors |
| Late 2026 | Projected peak of debt maturity and liquidity cycle | Expected acceleration in money printing and market rally |
| 2032–2034 | Projected crypto market growth to $100 trillion | Represents full maturity of the mega trend |
Quantitative Data Summary
| Metric | Value/Estimate | Context/Source |
|---|---|---|
| Global assets | $880 trillion | Total global asset pool |
| Gold market size | $30 trillion | For comparison |
| Crypto market size | $3 trillion (current) | Crypto as an emerging asset class |
| Future crypto market estimate | $100 trillion by 2032–2034 | Based on log trend extrapolation |
| Expected liquidity injection | ~$8 trillion over next 12 months | To service growing debt |
| Debt-to-GDP ratio (projected) | 140%–160% by 2030 | Rising due to population decline |
| NASDAQ annual returns | ~18% | Historical equity benchmark |
| Solana annual returns | ~166% | Since inception, as example of crypto returns |
Additional Key Points
- The crypto market is highly sensitive to liquidity, more so than traditional markets, due to its position at the extreme end of the risk spectrum.
- The business cycle drives not only crypto but also equities, commodities, and credit markets, linking macroeconomic fundamentals to asset prices.
- The current market “alligator jaws” phenomenon, indicating a divergence between liquidity and asset performance, is a temporary phase caused by liquidity plumbing issues in the financial system.
- Political and fiscal stimulus, particularly in the U.S. election cycle, is expected to support Main Street with liquidity and job creation, further fueling the macro cycle.
- Investors are urged to avoid short-term panic, leverage overuse, and instead adopt a patient, framework-driven approach to crypto investing.
Conclusion
This presentation offers a macro-driven lens on crypto investing, grounded in demographic shifts, debt dynamics, and liquidity cycles. The speaker emphasizes that crypto is not a speculative anomaly but a new macro asset class deeply connected to global economic forces. Despite short-term noise and liquidity disruptions, the long-term outlook remains extraordinarily positive, with massive wealth creation potential over the next decade. Patience, understanding the macro framework, and holding positions through cycles are key to capturing this opportunity.
