While many top crypto investors like Elon Musk and renowned TA experts including the pseudonymous Crypto Capo predict a lengthy crypto winter, Raoul Pal, the Chief Executive Officer of Real Vision and the founder of Global Macro Investor (GMI) believe Bitcoin (BTC), HIVE and the entire crypto market is drawing near to experiencing a trend reversal.
Raoul Pal States His Reasons
After hitting its all-time high of $69,000 in late 2021 during the epic bull run, Bitcoin (BTC) has unfortunately been in a steady downtrend, despite the increasing adoption. Notably, the leading cryptocurrency has declined about 78% from its all-time high, when it plunged to as low as $15,000 per coin in November 2022, as the bear market got more intense.
Similarly, Ethereum (ETH), HIVE, and all altcoins joined the price downtrend with some coins/ tokens crashing by over 50%.
According to the Real Vision CEO and GMI founder, several macroeconomic factors like high inflation rate, CPI, and low global money supply (Global M2) led to decreased liquidity in the crypto market, which in turn triggered the bear run.
It is worth noting that additional factors like the fall of Do Kwon's Terra ecosystem in May, which resulted in the meltdown of many other crypto projects like Voyager, Three Arrows Capital (3AC), and Celsius Network also fueled the fall of crypto prices. Likewise, the recent implosion of SBF's FTX exchange has further increased the selling pressure in the crypto market. More so, as the FTX contagion spreads, the bears continue to lead the market ride.
Macro Expert Says Liquidity is Imminent
It is a well-known fact that liquidity controls price action in the crypto market to a large extent. When there is high liquidity, assets are bound to increase in price but when there is low liquidity in the market, prices come crashing down.
According to Raoul Pal in his latest newsletter tagged 'when liquidity changes, everything changes,' macroeconomic factors are becoming favorable to the prices of Bitcoin (BTC), stocks, and altcoins like HIVE.
As stated by the investment strategist, some of these factors that could trigger market recovery include the easing of bank balance sheet constraints, the Fed pause, the fiscal stimulus, and the growth in Chinese credit among others. The economic historian added that all of these developments come together to force an increase in the available money supply in the global financial system (Global M2).
As aforementioned, an increase in Global M2 leads to an increase in liquidity in the crypto market which in turn signals an uptrend.
He said in the newsletter;
We’re on the precipice of a major turning point. The bears will soon go into hiding and the bulls will return to resume the uptrend they left behind not so long ago.
Backing his points with the M2 and BTC chart above, he noted that each time the available money supply, known as Global M2 goes up considerably, Bitcoin (BTC) and cryptos often tend to exponentially rise in price. At the time of writing, BTC is attempting hard to break the $17,000 resistance while HIVE is trading for $0.34 per coin.
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The bear market has been long and hard. Not a few have cashed out to minimize losses. But then, predictions such as these give hope. Though not crypto technically savvy, I believe that the winter would soon be over - eventually. Meanwhile, I hang on.
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The crypto winter will surely have an end although no one can say when.
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