The crypto bear market has been raging for over a year now, and many investors are wondering when it will end. Raoul Pal, a macro investor and co-founder of Real Vision, has some insights to offer.
In a recent interview, Pal said that he believes the crypto bear market will end when the Federal Reserve (Fed) pivots from its hawkish monetary policy. The Fed is currently raising interest rates in an effort to combat inflation. This is causing a sell-off in risky assets, including cryptocurrencies.
Pal believes that the Fed will be forced to pivot from its hawkish stance when it becomes clear that the economy is heading into a recession. This could happen as early as the second half of 2023.
Once the Fed pivots, Pal believes that liquidity will start to flow back into the crypto market, sparking a new bull run. He also sees other factors that could support a crypto recovery, such as the approval of a Bitcoin spot ETF and Ethereum’s switch to proof-of-stake.
Here is a more detailed look at Pal’s macro analysis of the crypto bear market:
The Fed’s hawkish monetary policy
The Fed’s hawkish monetary policy is the main reason why the crypto bear market is happening. The Fed is raising interest rates in an effort to combat inflation. This is causing a sell-off in risky assets, including cryptocurrencies.
When interest rates are low, investors are more likely to invest in risky assets like cryptocurrencies. This is because they have more money to invest and they are willing to take on more risk in order to earn higher returns.
However, when interest rates are high, investors are less likely to invest in risky assets. This is because they have less money to invest and they are less willing to take on risk.
The potential for a recession
Pal believes that the Fed’s hawkish monetary policy could lead to a recession. This is because the Fed is raising interest rates at a rapid pace. This could cause a slowdown in economic growth and lead to job losses.
A recession would be bad news for the crypto market. This is because investors would be more likely to sell their crypto assets in order to raise cash.
The approval of a Bitcoin spot ETF
The approval of a Bitcoin spot ETF would be a major bullish catalyst for the crypto market. A Bitcoin spot ETF would allow investors to invest in Bitcoin directly through their brokerage accounts. This would make it easier for investors to buy and sell Bitcoin, which could lead to increased demand for the cryptocurrency.
Ethereum’s switch to proof-of-stake
Ethereum’s switch to proof-of-stake is another bullish catalyst for the crypto market. Proof-of-stake is a more energy-efficient and environmentally friendly way to secure a blockchain network. It is also expected to make Ethereum transactions faster and cheaper.
Ethereum is the second-largest cryptocurrency by market capitalization. Its switch to proof-of-stake is expected to make it more attractive to investors and institutional users.
Raoul Pal believes that the crypto bear market will end when the Fed pivots from its hawkish monetary policy. He also sees other factors that could support a crypto recovery, such as the approval of a Bitcoin spot ETF and Ethereum’s switch to proof-of-stake.
It is important to note that Pal’s predictions are just that – predictions. No one knows for sure when the crypto bear market will end. However, Pal’s macro analysis provides some insights that investors can use to make informed decisions.
