In a recent interview with the asset management company Arca, the former Goldman Sachs executive Raoul Pal asserts that the macroeconomic climate that has kept the cryptocurrency market gloomy for the majority of the year is beginning to shift.
“The macro is rolling over for me. That is to say, we are entering a recession. Things such as the ISM (institute for supply management) survey and others should immediately begin to disintegrate. The futuristic components are already disintegrating. We observe it worldwide. Thus, growth is disappearing.
In addition, the narrative has not caught up, and most commodities are down 30% to 50%… Everyone is bullish and expects oil to reach $200. I anticipate a washout, and the price falls to $60. Thus concludes the inflation narrative.”
According to Raoul Pal, alterations to the macroeconomic environment would have an impact on businesses and subsequently the labor market.
“After Covid, people accumulated enormous stocks. These stocks are now unsold as a result of the economy’s slowdown and inflation’s eroding of disposable income. Therefore, we have seen it at Walmart and Amazon. They will begin discounting inventory in an effort to move it. People are terminating employees. Therefore, the macrocycle will enter its nasty phase.”
Pal underlines that the impending terrible economic news is good news for the financial markets.
“Why does it make Raoul belligerent? As a consequence, as inflation declines and bond rates decrease, liquidity circumstances improve. Liquidity conditions are the primary macroeconomic factor influencing financial markets.
In addition, the macro expert believes that, as liquidity circumstances improve, cryptocurrencies are poised to enter a new market cycle.
“From my perspective, let’s assign a 70% likelihood. Consequently, there is a high level of confidence that the bottom has been reached, and we are therefore beginning the uptrend.”