Macro investor Raoul Pal is convinced that the current crypto bear market will end only if the Federal Reserve stops raising interest rates to ease its hawkish monetary policy. According to Parr’s forecast, this could happen in the next few months.
“The Fed is unlikely to raise rates as quickly as people expect. My guess is that they might stop raising rates sometime in the summer, and that’s it,” he said in an exclusive interview with Cointelegraph.
Pal believes that high interest rates and fear of an impending recession are the main macro factors contributing to the current crypto bear market.
“Retail investors’ incomes didn’t rise as much as prices, so they lost their discretionary income. So people just had to lower average costs and reduce participation,” he said.
Pal believes that the market has not yet bottomed out, and a phase of mass liquidation involving crypto and legacy assets may be imminent.
“[Crypto] If we see liquidations in equities, maybe at some point we’ll see liquidations spike, and then eventually this will be the final capitulation of the market,” he said.
That’s when the Federal Reserve will ease monetary policy, allowing some liquidity to flow into financial markets, triggering the next cryptocurrency rally, Pal said.
“We’re going to see a rebound in bonds, a rebound in cryptocurrencies and maybe some tech stocks,” Pal said.
Aside from the macro situation, other factors that could fuel the next bull run are the approval of bitcoin spot ETFs and ethereum’s move to a proof-of-stake system, which is expected in the third quarter.
Check out the full interview on our YouTube channel and don’t forget to subscribe!