Raoul Pal is the founder of Global Macro Investor and Real Vision, a global macro-financial research institution, and one of the most well-known KOLs in the current crypto space. This article is based on Raoul Pal’s views on personal social media platforms, and BlockBeats has compiled and translated them as follows:
Regarding the cycle of the crypto market, the Bitcoin halving is the main driving force that is recognized by most investors. But I’m gradually starting to think that the main driver behind the crypto market cycle is not the halving, but macro factors.
The figure below is a comparison of the change in the growth rate of the global M2 money supply and the change in the market value of cryptocurrencies. We can see a strong correlation here.
This shows that even in the crypto market, liquidity growth and currency devaluation are still the main drivers of market prosperity, rather than a reduction in supply. I have always believed that in the market price determinants of all commodities, demand is always more important than supply, and it is the decline in demand that causes capital outflows and prices to fall.
These cyclical macro factors happen to happen in the midst of an exponentially growing crypto trend and drive the market from overbought to oversold and back to overbought again and again. But it’s worth noting that the crypto market’s popularity curve still exists, which is why the top and bottom of each cycle are higher than the previous cycle.
Also we need to note that the global M2 money supply growth in the first graph is turning. While it’s early days for this pivot, the crypto market is inherently forward-looking and has made the switch earlier than most assets.
So, has the crypto market hit a bottom? My view is probably balanced at the moment. But I’m more inclined to think that the turn at the macro level is very close. Yields in the bond market have also peaked with a high probability.
We can take a look at the investment returns of various crypto assets since the Three Arrows liquidation event:
The transaction volume of NFTs is also rising steadily, and the floor prices of those high-quality blue-chip projects have also stabilized or even started to rise. The bottom of the crypto market is usually not a straight line all the way up, and in the first few months after the recovery, there is usually a large pressure level detection at a certain point or sideways range.
Take SOL for example, SOL looks absolutely like a head-and-shoulders bottom structure at the moment.
While SOL/ETH’s breakout of the downside range has been corrected, if SOL breaks out of recent highs, it is likely to do better. Over the past 4 weeks, I’ve built a nice long SOL position and bought more ETH. Although SOL has a much smaller market cap than ETH, it still matters in my opinion.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/is-there-a-four-year-cycle-theory-for-macro-investors-to-analyze-bitcoin/
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