Renowned economist Raoul Pal, head of Real Vision media platform, shares his moderate optimism amid crypto mayhem
Investor, entrepreneur and analyst Raoul Pal demonstrates the most attractive opportunities in the current market situation and indicates which instruments traders should avoid.
Bottom might be close, but recession can still last for 18 months
Mr. Pal does not seem to be surprised by the ongoing dropdown of cryptocurrency prices. According to him, 60+ percent plunges are common on a 5-10 year time horizon.
As such, he recommends looking at the five-year exponential moving average; Bitcoin (BTC) price normally does not go more than 30 days below this critical level.
The flagship cryptocurrency still has a significant downside: Mr. Pal expects the macroeconomic situation (yields, stocks and so on) to get back to normal in 12-18 months.
At the same time, Mr. Pal’s Deviation Log Regression Model, RSI Metric and DeMark Weekly Charts Indicator suggest that we have entered the “buy” zone, and the bottom may be near.
For Mr. Pal, the market unlocks amazing opportunities for long-term portfolio management:
I am preparing to add significantly to my crypto positions. Probably from next week and in July.
Worst enemy of traders on volatile markets
While many traders are experimenting with opening short positions on major assets, Mr. Pal warns that this option might be too dangerous amid the turmoil:
Leverage is your enemy in a volatile asset. I never use leverage in crypto. Waves of margin calls hit those foolish enough to use it, forcing markets lower and causing more margin calls.
Hugh Hendry, a hedge fund veteran, stated yesterday that Raoul Pal is too optimistic about the ongoing market situation. Mr. Hendry recalls the 2008 drama:
At press time, Bitcoin (BTC) is changing hands at $22.20, down 68% from the all-time high set six months ago.
