Macro Guru Raoul Pal Details ‘Very Bullish’ Outlook on Ethereum and Crypto Markets as Merger Approaches
Former Goldman Sachs CEO Raoul Pal says he is very bullish on Ethereum (ETH) and the crypto markets despite the uncertain price performance in recent months.
In a new interview with crypto analyst Scott Melker, Pal says that crypto hedge funds that took big losses during the recent market turmoil are underweight ETH as The Merge – Ethereum’s transition to a proof-of-stake consensus mechanism – approaches.
The Real Vision founder says that markets take the path of most pain, and for ETH right now, that means up.
“I think everyone is still underweight The Merge. People will come into the merger or after the merger, we get this peak [and] we will have another retreat. A lot of people will say “Look it’s going back to the lows.” My guess is that it corrects sideways, does something, goes back into range for a while and then we explode higher.
So I’m very bullish right now. In the short term we are approaching overbought, but I think we just had a correction and I guess we will go again. What’s fascinating is watching the futures and futures markets is that everyone is hedging ETH pool risk, so buying ETH and selling futures now, somebody is going to lift that hedge off at some point.
I find that setup very interesting and I know all crypto hedge funds are underweight because they were all beaten so hard. So they’ve been buying calls as a way to have something over The Merge so they don’t get beaten up by their investors. So when you see that kind of setup, the pain trajectory is still higher.”
The macro guru says crypto’s relative underperformance this year can be attributed to an unexpected tightening in central bank liquidity, which he has previously predicted will change.
“From my perspective… I think the macro is the big thing that actually surprised most of us. Not that the macro surprised us, but the impact it has on crypto. First, when you have negative real wages, people have less money to dollar cost averaging. It’s still a private investment market. So the other thing is central bank liquidity is being pulled out, and if you look at the year-over-year charts of M2 versus Bitcoin, they’re basically the same. That tells you that when money comes out of the system, there is less money around.”
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