In a new daily briefing on his Real Vision YouTube channel, macro guru Raoul Pal says that after a couple of stormy months crypto markets could soon be bouncing back. However, three conditions will need to be met for this to happen.
In his take on the world, Pal notes that the U.S. Federal Reserve’s tight monetary policies are already factored in the price of crypto assets. He said:
“The pain of tightening is already in the market, so the probability is that the other side of the recession where conditions loosen is the thing that eventually gets priced in. The crypto markets, and I showed that with M2 chart, have priced in this full thing so it’s already there.”
According to Pal, the lowering of commodity prices and yields combined with the topping out of the US dollar will almost certainly benefit risk-on assets like cryptocurrencies:
“I think the low is close. Whether it’s in or not, I can’t tell, but I know from all of my economic work and I’ve probably got maybe 200 charts to back up all of the stuff I showed, that suggest the balance of probabilities are, that a lot of this has been priced, that the inflation problem is probably a thing of the past, and that economic growth is going to fall sharply.
What happens when economic growth falls sharply is we now have this Pavlovian instincts of the market looking forward and saying ‘The Feds are going to pause and monetary conditions are going to ease.’
So, if yields start coming lower, commodities start coming lower and the dollar eventually tops out, which is not clear that that’s going to happen yet, but at some point it will, then you’ve got all of those reversing and that tells you that, usually, that’s when the Fed have started reversing course as well.”
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Source: Igaming
