In a keynote speech delivered during an economic conference in Dubai, macroeconomic expert Raoul Pal issued a striking warning against ignoring the global monetary reality, emphasizing that financial markets are on the brink of an explosive phase of the upward cycle, driven by abundant liquidity and declining investor sentiment. Pal describes this phase as the most acute in years, with money flowing into high-risk assets, prominently including cryptocurrencies.
Global liquidity is inflating as markets brace for a violent reaction
According to Pal’s analysis, the close relationship between liquidity levels and asset prices is the primary driver of markets. He clarified that 90% of Bitcoin’s movements and 97% of Nasdaq’s movements are directly linked to liquidity, making tracking this indicator a vital tool for price forecasting.
Despite the prevailing pessimism in the general investment mood, Pal believes that cryptocurrencies are on the verge of a historic upward wave. He compared the current phase to what was witnessed in the markets in 2009 and 2020, when liquidity preceded institutional flows into digital assets. He believes the market is now in the third phase of its cycle, which is the frenzy or mania phase, characterized by rapid increases and strong speculation.
Pal expects Bitcoin prices to reach between $250,000 and $450,000 in this cycle, while alternative coins may achieve gains exceeding 20 times, similar to what occurred during the 2017 wave.
Inflation drives millennials to escape the traditional financial system
Pal points out that inflation and currency devaluation lead to a wealth erosion of at least 11% annually (8% due to currency depreciation and 3% from global inflation). With traditional investment horizons, especially in real estate, becoming blocked, millennials are turning to cryptocurrencies as a means to grow wealth and combat monetary erosion.
Critical investment advice: Stay calm… follow the liquidity and protect your assets
In this pivotal phase, Raoul Pal advises investors to remain calm, avoid leverage, be wary of scams, and to protect cryptocurrencies through secure means. He also emphasizes the importance of using macroeconomic analysis tools to interpret market movements and identify optimal entry points.
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