Raoul Pal recently updated his outlook on the current crypto market cycle.
Prior to founding macroeconomic and investment strategy research service Global Macro Investor (GMI) in 2005, Pal co-managed the GLG Global Macro Fund in London for global asset management firm GLG Partners (which is now called “Man GLG”).
Before that, Pal worked at Goldman Sachs, co-managing the European hedge fund sales business in Equities and Equity Derivatives. Currently, he is the CEO of the finance and business video channel Real Vision, which he co-founded in 2014.
In a recent interview with Anthony Pompliano, the founder of Pomp Investments, Pal discussed the potential paths Bitcoin’s (BTC) price could take, including a scenario reminiscent of the 2011-2013 ‘bubble’ cycle.
Highlights From Raoul Pal’s Conversation With Pomp
- Three Potential Scenarios: Pal outlines three possible outcomes for the current crypto market cycle:
- Normal Cycle (60% Probability): Pal believes there’s a 60% chance of a relatively standard market cycle, which could see Bitcoin reaching around $150,000.
- Front-Loaded Cycle (20% Probability): There’s a 20% chance, according to Pal, that the cycle could be front-loaded, potentially due to the impact of spot BTC exchange-traded funds (ETFs). This scenario might lead to a quicker rise to $150,000, followed by a decline, which could be unexpected for many investors.
- Bubble Cycle (20% Probability): Pal also considers a 20% likelihood of a ‘bubble cycle’, similar to the one seen in 2011-2013. This scenario would involve an interim top, a correction, and then a massive surge in price.
- Bubble Cycle Price Target: In the bubble cycle scenario, Pal suggests that Bitcoin could soar as high as $500,000. However, he humorously notes that even if his prediction is overly optimistic by 50%, the price could still reach $250,000.
- Factors Influencing the Cycle: Pal emphasizes the importance of various factors in determining which scenario plays out, including ETF flows, monetary policy, economic conditions, and the impact of the upcoming US presidential election.
Additional Insights from Raoul Pal: Crypto Trading Strategies
In his guidance — earlier this month — on crypto trading, Raoul Pal emphasized the importance of cautious and informed investment strategies in the volatile cryptocurrency market. Pal strongly advises against using leverage due to the amplified risks it poses in the highly volatile crypto environment. He also cautions traders against succumbing to FOMO (Fear Of Missing Out), which can lead to impulsive and often unprofitable trading decisions.
Pal recommends focusing investments on the top cryptocurrencies by market capitalization, such as Bitcoin and Ethereum, as they tend to be more established and less volatile. He also advocates for the practice of self-custody, encouraging traders to securely manage their crypto assets in digital wallets to mitigate risks like exchange hacks. For those inclined towards high-risk trading, Pal suggests limiting such speculative investments to a small portion of the portfolio, often referred to as a ‘Degen’ bag, to explore aggressive strategies without jeopardizing overall financial stability.
Furthermore, Pal endorses a long-term investment approach, often characterized by the crypto community’s mantra ‘HODL.’ This strategy involves holding onto assets over an extended period, potentially yielding better returns than frequent trading. He also advises traders to focus on long-term market trends rather than short-term fluctuations and to be prepared for regular significant market pullbacks, which are characteristic of the crypto market. Lastly, Pal mentions the strategy of ‘Buying The Dip,’ which involves purchasing assets post a significant price decline, provided the fundamental reasons for holding the asset remain strong.