Macro guru Raoul Pal says that Bitcoin (BTC) and Ethereum (ETH) are displaying historic signals as both crypto assets rest on critical support levels.
The former Goldman Sachs executive tells his 991,000 Twitter followers that Bitcoin is now the most oversold it has ever been, implying ultra-high-value opportunities for longer-term investors.
“This likely cyclical low in BTC is the most oversold in history vs the long-term log trend (the Metcalfe’s Law adoption curve) at 2 standard deviations…”
Metcalfe’s Law states that the value of a network is directly related to the number of users it has. Pal says that Ethereum’s Metcalfe’s Law adoption rate is also at a crucial support level.
“And ETH is on its long-term log uptrend (the Metcalfe’s Law adoption curve).”
According to the Real Vision founder, crypto prices are largely driven by USD liquidity, or the amount of dollars in circulation. He says that the recent downturn in digital asset markets has coincided with a sharp drop in global liquidity, but that the trend is about to reverse as central banks get backed into a corner.
“And this cyclical low which has pushed prices to the bottom of the long-term adoption curve is as ever driven by global liquidity… And global liquidity is on the cusp of a major turn, as recession comes into view and central banks change their policies.”
Pal says that crypto markets are entering the “boredom” phase, which he says usually precedes the next bull run.
“Don’t expect any of this to be exact but the contextualization is very important.
Crypto cycles are all about adding positions at the long-term uptrend when everyone is at max fear and disgust, followed by boredom.
The boredom phase is usually the digestion after all the worst shocking news comes out and the markets and participants try to repair and take stock. Leverage is totally wiped out and we can start with a fresh slate…”
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