Former Goldman Sachs Executive Makes High Conviction Call for Crypto Bottom Amid Shifting Macro Backdrop

Macro guru Raoul Pal says he believes with a high degree of certainty that the bottom for the crypto markets is in.

In a new interview with asset management firm Arca, the former Goldman Sachs executive says that the macroeconomic environment that has kept the crypto market bearish for most of the year is beginning to shift.

“For me, the macro is rolling over. By that, I mean we’re going into recession. We should see things like the ISM (institute for supply management) survey and other things start falling apart pretty quickly. The forward-looking elements are falling apart already. We’re seeing it globally. So that’s growth evaporating. 

Alongside that, the narrative hasn’t caught up, most commodities are down between 30% and 50%… Everyone’s long and expecting oil to go to $200. I think there’s a washout coming, and it goes down to $60. So that’s the last inflation story.”

According to Pal, the change in the macro backdrop will trickle down to businesses and then the labor market.

“People built massive inventories after Covid. Those inventories are now unsold because of the economy slowing down and inflation eating disposable income. So we’ve seen it from Walmart [and] Amazon. They’re going to start discounting inventories to try and shift it. People are laying off staff. So the macro cycle is going to get to the ugly phase.”

Pal highlights that the bad news on the horizon for the economy is good news for financial markets.

“Why is that making Raoul bullish? Because the outcome to that is as inflation comes down and bond yields fall, liquidity conditions improve. And what drives financial markets at the macro level the most is liquidity conditions.”

As for crypto, Pal says the shift in the macro landscape could trigger a tidal wave of demand from institutional investors.

“The other big players in the space now – the hedge funds, the macro funds and then the institutions – well, they’re also a function of liquidity. When liquidity is more available and cheaper for them, they can apply more leverage essentially in their portfolios.”

The macro guru also says that with liquidity conditions improving, he believes that crypto is gearing up to ignite a fresh market cycle.

“My view is, let’s give it a probability, 70% probability. So that’s pretty high conviction that the low is in, and therefore, we’re starting the upside cycle.”


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