Wait, what? Former Bitcoin bull Raoul Pal only owns one Bitcoin?

Former Goldman Sachs hedge fund manager and cryptocurrency bull Raoul Pal claimed in a tweet that he now only owns a single Bitcoin.

As the claim was made in the heat of a Twitter fight with self-proclaimed “Bitcoin Strategist” Greg Foss it’s not entirely clear whether it’s an exaggeration or an accurate statement about his holdings. Pal is the founder and CEO of Real Vision and Global Macro while Foss is an executive director at Validus Power Corp.

The revelation of his apparently small holding certainly caused uproar and angst among Bitcoin true believers, who’ve looked at Pal askance ever since he started calling Ethereum “the greatest trade” and predicted that ETH and altcoins will eventually outperform BTC.

Pal first purchased BTC in Nov 2013. He sold for a 10X profit in the so-called “fork-wars” of 2017 (missing out on an even bigger gain later that year) before adding to his collection in 2019 through 2020. In May 2021, he confirmed that he owned more ETH than BTC. At time of writing, Bitcoin (BTC) is worth $40,925.

The barney was instigated by Foss, who tweeted “Raoul is soft” followed by another intellectual tweet, “Raoul sucks and blows” shortly after. After some back and forth between Pal and the Bitcoin maxi, Pal posted that people like Foss and the Bitcoin community’s exclusionary ideology are why he only holds one Bitcoin.

This upset the Bitcoiner community, many who claimed he had let emotion cloud logic. “His feelings are hurting his future,” commented one user Emanuel in a reply to Bitcoin Meme Hub tweet. “I knew when he started to sip Vitalik’s coolaid he was a goner,” added another user, Jalan Foster.

The founder of Synaptic Ventures Marc van der Chijs complained that the fact Pal only owns one BTC based on the makeup of the community and not on the potential return “goes totally against the gospel he preaches on RealVision.”

However, some defended Pal, pointing to his impressive track record and reminding followers that he is in fact a trader, not a holder. Crypto analyst and founder of Crypto My Way “Coach T” wrote that he appreciates Pal’s “diverse views and intelligent thinking.”

Foss vs. Pal: a Twitter feud

It appears that the argument was in response to a disagreement on Pal’s stance on inflation and bonds as a trading vehicle. Foss explained that he didn’t support Pal promoting his trading strategy to others who don’t entirely understand how it works.

Pal disagreed, explaining that his views on bonds are “a trade, not a philosophy.” Despite this, in a following comment on the thread, Pal claimed that he doesn’t own any bonds.

Three hours after posting the original tweet attacking Pal, the argument eventually culminated in Foss tweeting an apology saying that he “regrets his actions,” adding that he “made a rookie error” and that he has “bigger battles to fight.”

Related: Raoul Pal says ‘reasonable chance’ crypto market cap could 100x by 2030

Just weeks ago, Pal said that he believes there is a “reasonable chance” that the crypto market capitalization will increase 100 times by the end of this decade. Hoping he’s right about that is perhaps something on which we can all agree.

Cointelegraph reached out to Raoul Pal via Real Vision and will update the story with any response.


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Evergrande, Credit Spreads And Bitcoin

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Greg Foss discusses, Evergrande, China’s high-yield market and his valuation model for bitcoin.

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In this episode of Bitcoin Magazine’s “Fed Watch” podcast, Christian Keroles and I welcomed back Greg Foss to the show to discuss the new articles he’s written on Bitcoin Magazine about Evergrande from a professional in the high-yield credit space. We get to know Foss a little better in this one and discuss, not only the facts of the matter on Evergrande and high yield, but also his beloved Canada and some predictions of the future.

Evergrande Contagion

Evergrande is an evolving situation, we probably shouldn’t even call it Evergrande anymore because it has spread throughout the Chinese high-yield financial sector and has caused the entire Chinese real estate market to teeter on the brink of collapse. We could call it the Chinese financial crisis.

Our interview follows the outline of his article “The Macroeconomic Implications Of Evergrande For Risk Assets And Bitcoin.” Foss started by comparing the size of Evergrande’s default to that of Lehman Brothers’. Strictly speaking of on-balance sheet size, Evergrande is approximately one-fourth to one-third as large as Lehman’s default. That is sizable, but should not destabilize the entire financial system. Foss pointed out what is more likely is a focused contagion within China and the emerging markets.

Foss pointed out that this Chinese financial crisis has already affected credit spreads in China to the point that they are priced like BBB-rated debt. If spreads continue to widen, debt from the second-largest economy in the world could trade like junk bonds. Investors will have to start asking themselves, if China is junk, what about all of the other emerging markets? The credit contagion will likely spread rapidly.

Bitcoin Valuation Model

Being a credit expert, Foss has a very interesting valuation model for bitcoin, which he has written about in depth on Bitcoin Magazine. The basis of his model is, “BTC is insurance on the decaying credit quality of fiat-issuing sovereign nations.” We discussed bitcoin as a long-volatility position since bitcoin has no counterparty or debasement risk.

His calculations are fascinating. I suggest you checkout his piece on Bitcoin Magazine linked above where he goes into detail, but suffice it for this podcast write up, he calculates bitcoin’s intrinsic value as the “current credit default swap (CDS) rates and total liabilities of the G-20 nations.” As the quality of sovereign credit fades in coming years, CDS spreads will widen and the value of bitcoin as counterparty-free insurance will increase.


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Greg Foss And Peter McCormack Versus Peter Schiff On Bitcoin

The three compared and contrasted the merits of gold versus bitcoin in an interesting debate.

Podcaster Peter McCormack hosted a debate on September 10, 2021, between gold bug Peter Schiff and bitcoin strategist Greg Foss, discussing the value of bitcoin and gold, economic history, the importance of market prices, risk management and portfolio allocations. This informative and robust debate came from a clash between highly-knowledgeable combatants in the field of investing. The debate fell off the rails in areas that got technical and related to game theory. As mentioned in the debate, gold bugs and Bitcoiners likely agree on many economic issues. The clash however often comes down to the merits of gold versus bitcoin, but also the role of assets in portfolio construction.

The debate began to deteriorate once it was revealed that Peter Schiff didn’t know about the Bitcoin network difficulty adjustment, nor how it regulates mining activity. Schiff claimed that if the price of bitcoin was to double, the amount of bitcoin mined would increase because miners would devote more energy to mining bitcoin. After Peter McCormack informed him of the difficulty adjustment, Schiff pivoted to questioning what would happen if the price of bitcoin crashed. Again, Peter Schiff discovered the difficulty adjustment would stabilize any drops in hash power and mining rate.

Shortly after this revelation, he stumbled again on the supply cap discussion incorrectly claiming that miners can collude to increase the overall supply cap (addressed here). Additionally, Schiff claimed that miners tax bitcoin users, a false claim he has used in other debates and has been publicly corrected on before. After his bold proclamations crashed into the wall of reality, the pace of interruptions and ad hominem attacks accelerated. Honest debaters engage each other for the pursuit of truth. But instead of acknowledging his flawed comments, Schiff pivoted to attack elsewhere.

The liveliest part of the debate centered around portfolio construction. As a professional portfolio manager this was informative, entertaining, and filled with shocking comments. Greg Foss fired a shot across the bow claiming Peter Schiff was a horrible risk manager based on his record, to which Peter Schiff replied he “doesn’t care.” As a fiduciary, Schiff has a duty to properly manage risk, and could have also countered Foss’s claims if he had a successful track record of risk-adjusted returns. See for yourself at his website.

Often debates stall out because the definitions of terms are not predetermined, and individuals talk past each other. An example would be a commodity, which, as defined by Peter Schiff only includes analogues or raw materials. Bitcoin is dismissed by Schiff as a form of money because it is not a commodity. However, the U.S. Commodity Futures Trading Commission defines Bitcoin as a commodity.

Peter Schiff’s view is that a successful cryptocurrency can only be backed by gold or another asset. He claims this by saying that because these other assets are not volatile, don’t swing around, and aren’t dependent on someone else buying it, which means it isn’t a Ponzi scheme. Peter Schiff fails to mention that gold is highly volatile, prone to drawdowns and decade-long and more secular bear markets. Between January, 1980, and April, 2001, gold suffered a nearly 66% drawdown from its peak to trough. It took almost 30 years for investors to break even during that secular bear market. In light of the discussion of a physical asset backing a digital currency, please see the Oracle problem.

Ultimately, debaters often walk away believing they have won. In this case I believe those listening from the gold side won this debate. Why? Gold bugs may have finally caught onto the fact that Peter Schiff has a severe lack of technical knowledge on the asset he is so against!

For those scoring at home, I tracked five ad hominem attacks by Peter Schiff, and none for either Greg Foss or Peter McCormack. I counted 17 interruptions by Schiff during others’ designated talking time, but only two interruptions by Greg Foss, and five by Peter McCormack. As I noted above there was a notable shift in demeanor and respectfulness after Peter Schiff’s multiple technical blunders.

My Proof of Work is linked here, with detailed notes and summaries on the exchanges.

This is a guest post by Bitcoin&Bald. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.


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Interview: Greg Foss On Bitcoin In The Macroeconomic Landscape

Greg Foss joined the “Bitcoin Magazine Podcast” to discuss how BTC fits into the macroeconomic landscape.

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This podcast episode was recorded as a primer for Greg Foss’ appearance on the Bitcoin 2021 “The Bitcoin Macro Landscape Panel.” If you couldn’t make the conference, be sure to catch the Bitcoin 2021 YouTube live stream for day one and for day two.

In this podcast recorded on May 25, Bitcoin Magazine Head of Research Dylan LeClair had a discussion with credit market expert Greg Foss to discuss the macroeconomic landscape surrounding bitcoin.

Foss has over 30 years of experience in credit markets, and his breadth of knowledge was put on full display during the podcast as the two discussed leverage in the financial system; investment strategies and hedging optionality using a small, long VOL allocation with a majority bitcoin position; and bitcoin as the ultimate solution to the fiat ponzi. The two also discussed the recent event of legendary macro investor Ray Dalio saying that he would rather own bitcoin than a bond, and what that means for the investment community.

This discussion is not one you want to miss. For more of Foss’ work, check out his report tilted, “Why Every Fixed Income Investor Needs To Consider Bitcoin As Portfolio Insurance,” and tune into his panel discussion with Preston Pysh, Jeff Booth, Mark Yusko and Trey Lockerbie from the main stage at Bitcoin 2021 in Miami.


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