Raoul Pal, an early investor in bitcoin (BTCUSD=X) who once argued it could be valued at $1 million, sold his entire position in the cryptocurrency as it surged to new highs.
The price of the digital currency has risen more than 168% since January. At the time of this writing, it was trading near $2,600.
Pal first invested in bitcoin in 2013 when it was hovering around $200 and he has held it ever since.
At one point, he put out a research note where he argued that the value of the cryptocurrency could surge to $1 million in the future. His thesis was based on bitcoin being a store of value, creating a “killer app” that would disrupt the payment processing business, and that blockchain technology was a true revolution.
“All the things that I thought bitcoin offered, to me, didn’t strand up any longer,” Pal told Yahoo Finance in a telephone interview on Friday.
In recent months, he’s changed his mind. First, there’s been debate within the bitcoin community about about changing bitcoin or even creating a new one. For Pal, that doesn’t make it a store of value anymore. Then, the idea that it would be a “killer app” never happened as companies like Visa launched their own blockchain for B2B payments.
“My thesis is really bitcoin is a solution looking for a problem,” Pal said.
Selling his position doesn’t mean he’s bearish.
“For me, I don’t see any reason to hold it. For me, I’m out.”
He does think that there’s a bubble, though. He thinks the price of cryptocurrencies will ultimately fall and “many will go to zero.”
Pal exited his position in bitcoin in late May. He estimates that he’s made between 7.5 and 10-times his money. He described it as “one of the best trades” and possibly “the best” trade he’s ever made.
Pal, a Goldman Sachs alum, is the publisher of The Global Macro Investor, which is read by the hedge fund elite. In addition, he’s the cofounder of Real Vision Television and Real Vision Publications.
His full explanation for why he’s out of bitcoin is available on Real Vision Publications.
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Julia La Roche is a finance reporter at Yahoo Finance.
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