Former Goldman Sachs executive Raoul Pal predicts that in the next six months, the crypto markets will soar out of the bear market quicker than in 2019.
In a new interview with The Breakdown host Nathaniel Whittemore, the macro expert says crypto is setting the stage for a massive price explosion.
“Next six months, crypto very strong. I don’t think it’s a replay of 2019, which was a longer pullback while global central bank balance sheets shrank for a period of time.
Knowing what’s going on in the world and where it’s going, we will probably accelerate. I think it looks more like 2015-16 cycle, which was a big spurt up, which I think we’re still in the middle of, then a long sideways correction for five months or whatever and then another explosion higher as you really start to see the central banks kick in.”
Pal also says that the venture capital (VC) investment that flowed into the space during the bear market, along with product development, is likely to result in innovation that will increase crypto adoption.
“But more importantly, a lot of money went in VC into the space and there was a lot of people building product. So the next phase of what adoption looks like will come. And I don’t know what it is. It could come from anywhere. It could come from gaming. It could come from digital ID. It could come from brands in the NFT (non-fungible token) and Web3 space. It could come from DeFi (decentralized finance). I don’t know. But it’s coming. So I think that’s very interesting.”
Pal goes on to predict that traditional finance (TradFi) hedge funds will start investing in crypto, injecting a burst of liquidity into the digital asset markets.
“What’s fascinating is the global hedge fund industry in TradFi is $3 trillion. That’s all pension fund money and sovereign wealth fund money and high net worth and IRAs (individual retirement accounts).
The digital asset hedge fund, so all crypto hedge funds added together is about $5 billion. It’s like 1% of the size. So I think we’re going to see a lot of capital flowing into the space, proper capital, not just retail capital, but sticky, long-term mega capital flows into the space, which is needed. The secondary markets are not liquid, which is why they’re so volatile.”
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