A prolonged slump in the prices of assets characterizes the crypto market in 2022. The combination of local and macroeconomic factors has impacted the price of these assets.
The stock market has also experienced the same bearish trend, with popular stock Nasdaq 1oo declining by nearly 33% in September 2022. The S&P 500 also lost 8% of its value in the same month.
Bitcoin and most cryptocurrencies are correlated to stock prices, although there has been a decoupling over the months.
The U.S. Federal Reserve also increased rates before considering a softer position due to widespread outcry from the general population. However, Raoul Pal stated that these rates could not keep these assets down forever, and cryptocurrencies and stocks would make a recovery.
Raoul Pal Bullish On Crypto
Raoul Pal – a former executive of Goldman Sachs, believes that risk-on assets such as crypto and equities are set for a bullish run. He believes that this will eventually happen as the macroeconomic climate becomes better.
Pal stated that the money supply in the world’s financial systems mainly controls BTC. He firmly believes that Bitcoin will lead the revival of other crypto assets.
Most investors are interested in high-interest rates and the chances of them increasing in the future. Pal took this in stride, downplaying the importance of the rates as “not big an issue as people believe.”
According to him, high-risk assets like stocks and crypto will still gain even with an increase in interest rates by the Federal Reserve.
Higher Rates Are Quite Deceptive
Pal believes that higher rates are a red herring. In his words: “Many will disagree, but, in my view, it is a false narrative.” He went on to state that since these rates posed no issues for tech or the broader market, it was insignificant even if there was a 3% increase.
He firmly believes that the frequency of rate change matters and not the level of the rates. He does not think that the rates will keep down the price of stocks and cryptocurrencies indefinitely.
Pal also stated that technology adoption is too fast to be affected by issues like capital cost. He cited Google overleaf, which yields average annual returns of around 30% without debts. With such healthy returns, Google will not care if the rates change from 1.5%, according to Pal.
Despite catastrophic events in the crypto world, many assets have shown durability, with bitcoin still retaining its number-one spot in the digital asset market. In addition, Bitcoin and other cryptocurrencies have shown signs of life as the market starts its journey to recovery.
Featured Image From Pixabay, Charts From Tradingview.com