Raoul Pal Gives His Macro Analysis of the Crypto Bear Market
Raoul Pal – CEO of Global Macro Investor – is predicting a “nasty recession” and “liquidation writ large” within the next few weeks, as the Federal Reserve continues tightening monetary policy. He believes the current panic within the crypto markets is similar to that seen during the bear market of June 2021, and the flash crash of March 2020.
The Effect of the Fed
In a Twitter thread on Thursday, Pal argued that global markets across the board are in for a bruising – not just crypto. “Layoffs are coming, as are house price falls,” he said, claiming that demand is collapsing due to the “largest monetary tightening in history.”
Last week, the Federal Reserve announced a 0.5% interest rate hike – the greatest monthly hike since May of 2000. Both the crypto and stock markets have been collapsing in the aftermath, with chairman Jerome Powell promising multiple equivalent hikes in the months to come.
Pal claims that the equity markets have already priced this in, and that both credit and bond markets are just beginning to do so. Oil, he believes, is bound to break lower, which will give an “excuse” for the Federal Reserve to quit tightening by July.
However, he thinks the near term will be quite bleak.
“The next 4 weeks are going to be highly unsettling as every position gets taken out and shot,” he wrote. “There will be no safe place to hide (except bonds – but most people are short those).”
Crypto in “Full Panic Mode”
Crypto is no exception, with the price of Bitcoin now stuck below $30,000. It recently dipped to lows unseen since December 2020 on BitStamp, while both Terra and TerraUSD have completely fallen apart.
As Pal puts it, the crypto market is in “full panic mode”, with the “monkeys” (likely referring to Bored Ape NFT holders) busy “flinging poo at each other”. The CEO himself uses a Bored Ape as his Twitter profile picture.
Nevertheless, Pal calls crypto a “long-term investment” rather than a trade, and sees the incoming recession as a “huge opportunity”.
The investor is known for his extreme interest in Ethereum becoming the so-called “internet of value”. He concluded that he’ll be taking this opportunity to purchase more of the cryptocurrency, which only recently fell below $2000.
Cardano founder Charles Hoskinson believes the crypto market has entered a phase of “panicked blood in the street,” and could possibly take months to begin recovery.
Nevertheless, MicroStrategy CEO Michael Saylor remains bullish as ever on Bitcoin, calling it “the best inflation hedge” on Thursday. The recent downturn has put his company’s overall Bitcoin position underwater.
