Raoul Pal, founder of Real Vision and a renowned macroeconomist known for his predictions regarding the cryptocurrency market, made noteworthy assessments about the future of Bitcoin (BTC) and the cryptocurrency market in an interview. Pal argued that the recent market downturns do not indicate the beginning of a new bear market, suggesting that Bitcoin is currently undervalued.
Pal noted that Bitcoin is going through a different cycle than the traditional four-year market cycle, and said that investors risk selling early believing the bull run is over.
Raoul Pal: The Drop in Bitcoin Is Not a Bear Market
According to Pal, the recent correction in the cryptocurrency market does not signal the end of traditional cycles. The macroeconomist likened the current market conditions to the correction process experienced in 2020, which was followed by a strong rally.
Pal made the following statements regarding the matter:
“I’m sorry, but this isn’t a cycle. This is a correction happening in the middle of a cycle. It’s similar to a longer version of what happened in 2020.”
Pal argued that there wasn’t a true liquidity squeeze in the market, noting that global liquidity had largely remained flat, which he said was different from a traditional bear market.
The macroeconomist also warned that investors who try to sell at the peak and buy back at the trough by following Bitcoin’s four-year cycle could face serious difficulties.
According to Pal, investors may miss out on buying opportunities by worrying that prices will fall further. He believes that in a potential supercycle, those who sell early could miss out on a significant portion of the market’s massive rally.
Is Bitcoin Cheap Relative to Nasdaq and Global Liquidity?
One of Pal’s most notable observations in the interview was regarding Bitcoin’s current position relative to other asset classes.
The renowned macroeconomist stated that, according to his analysis, Bitcoin has fallen into the oversold region against the Nasdaq by approximately two standard deviations, and is about 1.5 standard deviations below its long-term logarithmic price trend.
Pal argued that global liquidity is at historical highs, and US liquidity is also near its peak levels. However, he said that Bitcoin’s inability to mirror this indicates a significant divergence.
Pal believes that one of the main reasons for this divergence is the capital flowing into the AI sector, and stated that the current liquidity in the market is insufficient to support both AI stocks and cryptocurrencies simultaneously.
According to Pal, if capital flows back into the cryptocurrency market, Bitcoin and other crypto assets could approach their previous highs simply by closing the gap between them in terms of liquidity indicators.
Capital Flow Expected from Gold to Bitcoin
Touching upon the relationship between Bitcoin and gold, Pal said he expects capital to flow back into Bitcoin following gold’s recent strong performance.
Pal noted that both assets benefit from the long-term hedge against currency depreciation, but they react to different macroeconomic conditions.
The well-known figure argued that gold’s recent strong rise might stabilize for a while, after which liquidity could shift back to Bitcoin.
According to Pal, Bitcoin has significant long-term potential, both as a hedge against monetary devaluation and as an asset that benefits from technological network effects.
