Former Goldman Sachs Group Inc GS hedge fund executive Raoul Pal says that the crypto market is growing at 137% a year while the internet grew at 76%.
Based on data from Crypto.com, the World Bank, and Global Macro Investor himself, Pal says that even if the growth of the crypto economy slows to the same pace that the internet expanded, the crypto industry is heading to a staggering five billion users by 2030.
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... pic.twitter.com/MiLu3nPTPV— Raoul Pal (@RaoulGMI) March 12, 2022
“Using the 76% growth rate (suggesting a near halving of network growth as the 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,” says Pal.
If DA's slow their growth to that of the internet's initial growth rate you get to 1.2bn users by Dec 2025 or if we assume the first 6 yrs rate of growth of the internet we get 2.5bn users (shown on linear scale for dramatic effect). pic.twitter.com/6BkNWsbAQf— Raoul Pal (@RaoulGMI) March 12, 2022
Pal has set specific price targets for Bitcoin BTC/USD based on various rates of adoption moving forward. "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."
The macro investor says by taking the regression trend from 2013 to avoid the very early spike, "That gives slower growth and lower targets. That gives trend at $700,000, one standard deviation [above] at $350,000 and two standard deviations at $200,000."
He adds that his equation tracks the market capitalizations of Bitcoin and Ethereum ETH/USD as well as XRP and Polkadot DOT/USD remarkably well.
“2021 was an accelerating growth year and the Reed’s Law effect of networks built upon networks creating, even more, exponentiality is clear. But year six after the first five million users, crypto has 295 million participants and the internet had 119 million,” says Pal.
Talking about Ethereum, Pal says it may eventually achieve a larger market cap than Bitcoin if its decentralized application ecosystem becomes widely adopted.
“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,” he adds.
Photo: Courtesy of CoinDesk on Flickr
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