Raoul Pal’s Views on Bitcoin, Ethereum, and XRP Hitting Bottom
Macro investor Raoul Pal recently shared his insight, suggesting that major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Ripple’s (XRP) have reached their “final low” following a liquidity squeeze earlier this quarter. Pal explained that the crypto market experienced significant downside pressure in October when liquidity was removed from the financial system. This led to forced liquidations and exposed vulnerabilities related to leverage, resulting in a cascade of selling.
Despite the initial sell-off, Pal noted that many assets managed to hold above their lows or quickly recover, indicating a potential market bottom. Recent rallies in the crypto market have further supported his view that the selling pressure may be subsiding. Bitcoin, Ethereum, and XRP are currently consolidating around levels established after the October drawdown, suggesting a weakening downside momentum.
Pal emphasized that the key factor driving these market movements is liquidity conditions rather than fundamental issues within the crypto space. He attributed the recent market stress to a liquidity shortage in the banking system, prompting authorities to pause quantitative tightening. As year-end funding pressures mount, Pal anticipates additional liquidity measures to be introduced.
Changes in U.S. Treasuries and bank leverage requirements may prompt banks to increase their holdings of government debt, thereby boosting credit creation within the banking system. This could result in trillions of dollars of additional liquidity entering the economy. Pal also pointed to potential interest rate cuts, fiscal policies supporting disposable income, and incoming deposits as factors that could bolster risk assets.
Furthermore, Pal discussed the potential impact of forthcoming digital asset legislation on crypto adoption in financial markets. Clearer regulations could expand the use of cryptocurrencies, providing a favorable environment for market growth. Despite acknowledging the likelihood of continued volatility, Pal believes that the overall market conditions are conducive to higher prices as liquidity eases and crypto adoption expands.
In conclusion, Pal suggested that the market has likely already experienced its lowest levels for this cycle, citing a completed liquidity-driven selloff and upcoming monetary and fiscal support as indicators of a positive market outlook. While uncertainty may persist, Pal remains optimistic about the potential for higher prices as liquidity conditions improve and crypto adoption continues to evolve.
