In brief

  • Financial TV channel Real Vision has invested 10% of its cash holdings into Bitcoin.
  • Real Vision CEO Raoul Pal explains that it sees greater upside in doing so.
  • Pal has also invested 98% of his liquid assets into Bitcoin and Ethereum.

Financial TV company Real Vision invested 10% of its cash holdings in Bitcoin around three months ago, according to CEO Raoul Pal.

It joins a growing list of companies that have directly invested in Bitcoin, including business intelligence firm MicroStrategy and payments company Square. According to BitcoinTreasuries, these firms in total hold 243,000 Bitcoin, worth a total of $4.5 billion.

“We think it’s a good way to hold excess cash. It’s not like I haven’t done the work on it, I’ve been involved in this space since 2012,” Pal told Decrypt.

Real Vision invested its cash holdings in Bitcoin using crypto lending service BlockFi. It also lends out its Bitcoin using the service, which currently offers 6% APY.

Bitcoin stacked on dollar bills
More companies are swapping dollars for Bitcoin. Image: Shutterstock.

“It’s only 10%. What’s the worst that could happen? It goes down 50% and we lose 5% of our treasury. Well we’re a subscription-based business; we generate cash, so should be fine. But if it goes up 10X, it makes a decent difference,” he explained.

Why companies are hesitant to invest in Bitcoin

Pal said that the reason many companies haven’t invested in Bitcoin is because the corporate treasurer—who typically reports to the CFO—needs to justify putting firm assets into cryptocurrency. And to do that, he needs to be able to reassure shareholders.

“He needs some piece of paper written by an investment bank or somebody with credibility that says this is a really good diversification asset that adds overall value to your portfolio. The moment that kind of research comes out—and there is some of it coming out—that will completely shift the game,” he said.

“Talking cyber hornets is not going to get a pension fund to buy it,” he mused.

Real Vision’s purchase caught the beginning of the recent bull run that saw Bitcoin’s price soar from $12,000 up to a peak of $19,850 before retracing down to its current value of $19,240. Yet that’s still an increase of 60%.

And to Pal, this is just the beginning.

“I do think it gets to $1 million,” Pal said, adding, “Now that’s within the next five to six years. So, where does it get to this year? I don’t know, somewhere between $150,000 and $300,000. It’s impossible to know but it’s a lot further than here.”

It’s not just his firm’s money that is in Bitcoin. Pal has also personally invested in the cryptocurrency from time to time over the last eight years—and recently went all in.

A Bitcoin journey

Pal was born in the UK but lived in Spain between 2008-2012 when it suffered a financial crisis. At the time, he was trying to set up the “world’s safest bank” with some clients of his financial publication Global Macro Investor. But it was going nowhere.

“Eventually one of my clients came to me and said: ‘have you thought about Bitcoin properly?’ I did some work on Bitcoin and bought it,” Pal said.

Pal invested around $25,000 into the cryptocurrency. When its price rose 100% in a month, he swiftly sold it for a neat profit. He bought back in a few times over the following years, making a 10X gain at one point. He eventually sold over the Bitcoin/Bitcoin Cash split because he didn’t understand the technological differences.

Cut to April 2020 and Pal had a balanced portfolio of 25% Bitcoin, 25% gold and 25% USD—plus some bonds. Yet earlier this week, he decided to spice things up and went all in on cryptocurrency.

“Ok, last bomb - I have a sell order in tomorrow to sell all my gold and to scale in to buy BTC and ETH (80/20). I dont [sic] own anything else (except some bond calls and some $'s). 98% of my liquid net worth. See, you can't categorize me except #irresponsiblylong Good night all,” he tweeted on November 30.

But why did he abandon gold?

“I’m a macro guy so i’m looking for where’s the best risk-adjusted return and Bitcoin was basically eating every other asset’s lunch. And I held onto my gold for as long as possible and I’m like, what is the point?” he said.

“I’m still bullish gold, I just think Bitcoin goes up a lot more,” he added.

Pal explained that he uses multiple methods of predicting Bitcoin’s future trajectory, including technical analysis and Metcalfe’s law—the idea that a network’s value is proportional to the square of the number of nodes in the network.

But it’s not just theory. He has been watching the space closely over the last eight years, and sees a big difference in the current investment landscape.

“It’s ridiculously different,” he said. “All the hedge fund guys have basically done it on their personal accounts and they’re all figuring it out how to get it into their funds.”

Pal said that family offices are already involved in this space but are starting to have bigger allocations to Bitcoin because they’re understanding how disruptive it is.

“There is a wall of money coming,” he added.

Investing in Ethereum and the wider ecosystem

Pal also chose to invest about 20% of his holdings in Ethereum. He did so for three reasons.

First, he noted that it has been forming a base against Bitcoin for a long period of time, and outperformed it this year. Second, there are big developments on the base layer, namely Ethereum 2.0. Third, he sees a big future in a tokenized world.

Ethereum
Ethereum is the second largest crypto by market cap. Image: Shutterstock

“Bitcoin is this perfect reserve asset and Ethereum and others are platforms that allow for technological disruption—that’s valuable,” Pal said.

It’s for this reason that he set up Real Vision Crypto, a subsidiary that will take its analysis of the traditional financial world and apply that to the crypto world. A world that he expects will grow massively over the next few years.

“If you think that the world’s biggest equities are like $2 trillion, and you think gold is a $11 trillion asset and it’s probably likely to double over the next few years, so it becomes a $20 trillion asset—where is this whole space in that? I think $10 trillion is a good start. What’s that over, five years? Seven years? Something like that,” said Pal.

He added, “There’s a long way to go in this. There’s a huge area. And when you’re disrupting money, the rewards are money, so therefore the market cap’s going to be huge from this.”