Crypto assets are growing at a far faster pace than the internet, according to macroeconomic expert Raoul Pal.
The founder of Real Vision and Global Macro Investor says he’s spent extensive time and resources updating his numbers on global crypto adoption – and the data is clear.
“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.
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.”
Pal’s new numbers are based on data from Crypto.com, the World Bank and Global Macro Investor itself.
He 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.
“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!”
Pal says he’s also developed a solid way to determine the value of a given crypto network by multiplying the number of daily transaction volumes in dollars, by the number of active users.
Pal says his equation tracks the market capitalizations of Bitcoin and Ethereum as well as XRP and Polkadot (DOT) remarkably well.
Pal says Ethereum (ETH) 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.
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).”
Pal is also detailing specific price targets for Bitcoin 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.
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 [above] at $350,000 and two standard deviations at $200,000.”
Pal says NFT communities may be displaying the same growth metrics, and the key way to know if a crypto network is creating sustainable value is to see if it is moving large volumes of capital between increasingly large numbers of users on a daily basis.
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