Raoul Pal Introduces New Value Model To Crypto Based On Adoption
Macro economist, Raoul Pal looks into the growth pace of crypto and notes that it’s growing much faster than the internet in the early stage.
According to the Chief Executive and Founder of Real Vision, he has been assessing the data on global crypto adoption, and the direction seems clear.
“We updated our well known chart of crypto adoption vs the internet (both starting at 5m users). 2021 was an accelerating growth year and the Reed’s Law effect of networks built upon networks creating even more exponentiality is clear…
By yr 6 after the first 5m users, crypto has 295m participants and the internet had 119m. Crypto is growing at 137% a year while the internet grew at 76%. As I always say, this is the fastest adoption of technology the world has ever seen…”
By yr 6 after the first 5m users, crypto has 295m participants and the internet had 119m. Crypto is growing at 137% a year while the internet grew at 76%. As I always say, this is the fastest adoption of technology the world has ever seen… pic.twitter.com/5hkaumxirS
According to Pal, even if the crypto adoption growth slows down to the same level of the early internet, the industry is looking to hit five billion users by 2030.
“Using the 76% growth rate (suggesting a near halving of network growth as network matures), we now get to 5 billion users by 2030.
I.E. it becomes THE dominant source of owning, transferring and recording value and contractual terms global. Wow!”
New model to evaluate any crypto network
According to the economist, he has developed a new way to evaluate a given crypto network by multiplying the number of daily transaction volumes in dollars, by the number of active users.
The model seems to keep good track on the market capitalization of several crypto assets.
According to the market expert, Ethereum (ETH) could eventually flip Bitcoin (grow to have a bigger market cap), assuming that its decentralized application ecosystem grows in terms of adoption.
“Each chain creates value for different reasons – BTC for pristine collateral, security and store of value brings large numbers of users transferring large sums of value. Hence why it is the most valuable network.
But ETH has more applications and the transaction value per monthly user is broadly in line with BTC. Thus, if ETH attracts more users over time, it will flippen BTC in market cap (not that it matters as we are comparing apples with oranges! Both have different value/uses).”
The former Goldman Sachs executive also offers scenarios for Bitcoin’s future valuation at different rates of adoption.
“Assuming BTC remains one standard deviation below trend it gives a price target of $600,000. If it slows to two standard deviations below trend, then you get a number of around $300,000.
Maybe the regression trend should be taken from 2013 to avoid the very early spike. That gives slower growth and lower targets. That gives trend at $700,000, one standard deviation at $350,000 and two standard deviations at $200,000.”
