Raoul Pal: Corporate giants may not follow MicroStrategy in Bitcoin

 4. November 2020      

Communication is crucial, especially when it comes to explaining Bitcoin to mainstream business entities

A few months ago, business intelligence giant MicroStrategy converted $425 million from its treasury into Bitcoin (BTC). The move was greeted as a big step in the right direction for mainstream adoption of Bitcoin. MicroStrategy, led by its CEO and founder Michael Saylor (a skeptic turned Bitcoin bull), may not, however, usher in the huge corporate adoption planned for the major crypto asset, according to former hedge fund manager Raoul Pal.

„I don’t think Michael will promote adoption in the industry because he is actually speaking the language of Bitcoin and not the language of corporate treasurers, and this has to happen,“ Pal explained to Peter McCormack during an episode of the podcast What Bitcoin Did released yesterday.

„In this industry we are not good at speaking the language of who we actually want to attract into the system.
In August, MicroStrategy released its $250 million purchase in BTC. In September, the company accumulated an additional $175 million in assets. Although he was very skeptical of cryptocurrency in the past, Saylor has become a strong Bitcoin supporter, speaking frequently about the currency on Twitter. In addition, he revealed that he bought 17,732 BTC as a personal investment prior to the purchase made by his company.

„Forget about the amount of money, it was a big part of the cash reserves,“ said Pal about MicroStrategy’s investment in BTC. „Now, most companies won’t do the same, but Michael is a true believer,“ explained Pal, adding that Saylor is not using the right language for adoption growth.

„I’ve mentioned it several times before: you Bitcoin Era won’t convince the pension system and asset allocations until you start talking about bearer asset allocation models,“ said Pal. „None of us know what they are because nobody uses them outside of that industry.

Pal himself admitted that he does not know the exact allocation strategies used by the various sectors, but described their widespread prevalence. Basically, each sector has a common set of specific objectives, terminology and native strategies.

„It is based on asset allocation models used by the entire pension fund sector, consultants, actuaries and so on,“ he explained.

„Talking about the value in 100 years of money to Microsoft’s treasurer who could hold the position for 10 years before moving on is irrelevant. It doesn’t matter. Show him the effects of portfolio diversification on the reserves he has between trade credit, cash, treasuries and different currencies and simply tell him, ‚if you do this, this is what it does to your portfolio. Then he will say, ‚Yes, I understand. I’ll do something like that.'“
In 2020, a number of mainstream traders took large positions in Bitcoin, such as billionaire Paul Tudor Jones. However, the corporate asset trend is still in its early stages.