Prediction Not checkable as stated
Paul: 10% Chance Bitcoin Suffers Disabling Attack By 2026
“I put it at maybe 10% over the next five years that there is a successful attack on Bitcoin that effectively renders the network temporarily unusable, but unusable in a way where we don't know when the next attack will be.”
Insight
Paul: Bitcoin is a risk asset that drops with equities during recessions
“And we were strongly convicted that that's nonsense, that Bitcoin is a risk asset. And while it might not be correlated one to one on a five percent S&P move, If S and P falls enough, Bitcoin is going to catch up to the downside because that's wealth destructi…”
Assertion Not checkable as stated
Paul: Professional Capital Controls Under 3% of Crypto Assets
“The professional capital and cryptocurrency probably controls less than three percent of the assets, which is the lowest ratio of any major asset class.”
Prediction Didn’t hold up
Paul: The NFT Space Will Probably Grow 100x By 2024
“So I think over the next three years, we're going to see the NFT space grow probably a hundred X in size.”
Insight
Paul: Exploitative Play Beats Game Theory Optimal Play in Poker and Trading
“In poker, there's game theory optimal play, and there's exploitative play, and the biggest winners are the ones who exploit.”
Insight
Paul: Segregating Risk Management From Portfolio Management Is Nonsensical
“Risk is inseparable from return, that the idea of segregating the risk function from portfolio management is nonsensical. There's actually a discussion that I sometimes have with prospective investors in BlockTower, where they'll say, oh, do you have a separat…”
Opinion
Ari Paul: Bitcoin faces existential risk and could go to zero
“There's also existential risk. This is maybe debatable today, but I think it certainly could go to zero, as most assets in the world can.”
Opinion
Paul: Traditional Quant Firms Cannot Utilize Crypto On-Chain Data
“Amazing thing about cryptocurrency is that we have these whole new types of data that traditional quant has never had. And traditional quant firms have no idea how to make use of it.”
Opinion
Paul: Fierce Competition Will Compress NFT Marketplace Profit Margins
“I think their profit margins are pretty small because I think there's going to be fierce competition driving profit margins down.”
Assertion Partly supported
Paul: Most Top Ten US Endowments Have Invested in Crypto Funds
“What I can say generally about the endowment world is most of the top 10 endowments have invested in crypto funds.”
Prediction Not checkable as stated
Paul: Direct Bitcoin Ownership Will Be Operationally Easy for Endowments Soon
“But my guess is that in another year, that's similarly will feel not like a terribly difficult allocation decision operationally.”
Insight
Paul: Market Makers Must Yield to Massive Counterparty Bets
“Susquehanna, the whole thing as a market maker is there's always someone who knows more than you always. And your goal as a market maker is basically no one to get out of the way. If someone is willing to bet a billion dollars that you're wrong, it doesn't mat…”
Insight
Paul: Institutional Market Errors Stem From Structure and Incentives
“And I spent a lot of time thinking about, man, why are all these really smart people with tons of skin in the game making such obvious errors? And my conclusion was it's structural. It's not that these people don't see it. It's that incentives are everything. …”
Assertion Supported
Paul: Endowments and Pensions Were Net Sellers in 2008 Crisis
“The reality was in the financial crisis, endowments and pensions were net sellers, not net buyers.”
Assertion Not checkable as stated
Paul: A Third of UChicago Endowment Staff Bought Bitcoin in 2016
“Almost immediately, probably a third of UChicago endowment employees bought Bitcoin in 2016.”
Insight
Paul: Endowments Entered Crypto Through VC Funds to Bypass Board Approval
“The first crypto investments by the endowment world were in VC startups investing in the crypto space, because that didn't require board approval. It was just another VC fund.”
Assertion Supported
Paul: Two Sigma, Citadel, and Rentech Stayed Out of Crypto in 2017
“I saw that guys like Two Sigma and Citadel and Rentech and the discretionary trading houses, none of them were in crypto for good reasons.”
Disclosure
Paul: BlockTower Made Millions Manually Arbitraging Crypto in Late 2017
“In late 2017, we made a few million bucks manually arbitraging between us based regulated exchanges.”
Assertion Not checkable as stated
Ari Paul: Basic arbitrage across low-risk crypto exchanges is mostly gone
“Today, basic arbitrage among zero counterparty risk exchanges, or low counterparty risk at least, mostly doesn't exist. It gets arbitraged away by guys like DRW.”
Disclosure
Ari Paul: BlockTower holds crypto baskets based purely on exchange accessibility
“So as an example of a bet that we have on right now, we've created baskets based entirely on accessibility. So we have a basket of Coinbase coins, a basket of Binance coins, a basket of Korean and Japanese retail coins, where it's the assets that are easiest f…”
Insight
Paul: Wealth created by Bitcoin flows down the risk curve to newer assets
“The wealth created by Bitcoin flows down the risk curve. Bitcoin going from 3000 to 30,000 in a year, that generates wealth. That wealth looks for its next 10 X and flows down the risk curve into riskier, newer assets.”
Disclosure
Paul: BlockTower Has Allocated Very Little Capital to NFTs
“I've been bullish on this for five years. I can tell you as an investor, I've actually allocated very little to it.”
Assertion Contradicted
Paul: BitMEX held 70% of global Bitcoin trading volume around 2020
“BitMEX, which had the largest trading volume for Bitcoin in the world, they had 70% of all volume about a year ago.”
Opinion
Paul: Twitter Serves as the Bloomberg Terminal for Crypto Traders
“Crypto Twitter is the best aggregator, which is to say, if you follow the right 50 people on Twitter, any time a good article's put out a good anything, it ends up getting posted there. Twitter is the equivalent of Bloomberg for a lot of crypto traders”
