Real Vision CEO Raoul Pal thinks crypto will recover from its high-profile disasters in the same way that hedge funds have in the past.
In a new interview with crypto analyst Scott Melker, the former Goldman Sachs executive says he thinks institutions are still interested in diving into the crypto space and will do so once digital assets are regulated.
“We’re at the blow-up phase – the FTX scandal. Now, I’ve seen this – I’ve seen it with Mt. Gox, I’ve seen it with Bitfinex, I’ve seen it every single bloody cycle, and this time around it was like, ‘Oh my God, it’s the end of the world.’ Yeah, it’s every time the end of the world, and guess what? It’s not.
It’s never the end of the world. People say, ‘Well nobody’s ever going to come back into this market.’ Well, I’ve been around. I’ve been around the block a long time.
I’ve been 30 odd years in financial markets, and I’ve seen this with hedge funds. Long-Term Capital Management – the biggest blow-up of a hedge fund in history and the Fed had to bail out the whole system. What everybody shouted then – ‘They’re a Ponzi, they’re a scam, they’re overleveraged, hedge funds are un-investable.’ Net outcome? The net assets of hedge funds went up 5x over the next seven years. Why? Regulation.”
According to Pal, crypto regulations will create a safer environment for both institutional and retail investors and that could trigger an influx of capital back into the markets.
“Everybody tells us that institutions are still looking at this space. So my guess is regulation and an upswing in prices in global liquidity and they start coming in in a more meaningful way. They tend to be momentum chasers…
Regulation equals safety, equals green light, equals go. If that coincides with global liquidity, it creates fireworks.”
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