Bitcoin: This is when risk assets like BTC and cryptocurrencies will rise the most, according to Raoul Pal
Former Goldman Sachs executive Raoul Pal said the macroeconomic landscape is starting to look attractive for risky assets like Bitcoin (BTC) and cryptocurrencies.
During a new Ask Me Anything (AMA) session on Real Vision, Pal said investor sentiment is currently extremely fearful and that could be the catalyst for risky assets to make an unexpected rally.
“I think the painful trading is misleading people into thinking that a big crash of glory is coming, an 'I told you so' time and earnings will be adjusted. All I know is that people are negative. They're more negative than I've seen in any of the stories... They're super negative. Everyone is super protected. Sales were very high.
So I think the path of pain is to go lower, suck shorter, and then tear higher. It will go higher as bond yields start to fall as they finally begin to recover for the business cycle. Bond yields have fallen sharply compared to the ISM (Institute of Supply Management) survey. It's a relationship that goes back 50-60 years."
According to Pal, the bond market is broken as sellers are currently overwhelming buyers, but the macro expert says the setup could prompt the Fed to finally ease its monetary policies.
“Now it is a function of liquidity because no one enters the market and only sellers. I think it will cause a lot of big problems. That will eventually produce the answer, and the answer to everything is always more of a problem. The UK has proven it: more cows, more money printing [and] getting us out of this mess.
When people say they'll keep walking until it breaks, well, when more dumbbells break. The whole system is now set to a squeak like a dumbbell crawl, turn the faucets back on.”
Pal emphasized that once central banks bounce back, that's when assets like Bitcoin and cryptocurrencies can recover.
“It's a sad situation, but it is what it is, but you can turn the situation in your favor. Trading in your favor is understanding when that change comes and what you do with risky assets. It is very interesting.
Oct 11, 2022