Weakness in the macro markets continues to persist. After having a thunderous July on the back of optimistic earnings reports, the stock market started retracing. In fact, the SPX is on the verge of creating a new 22-year-old bearish milestone. Bitcoin and the broader crypto market are more or less following suit. However, experts believe that crypto will end up outperforming stocks.
In a recent AMA session on YouTube, former Goldman Sachs executive and Real Vision CEO Raoul Pal explained that in the digital world, where anything could theoretically be inflated to infinity, blockchain-enabled scarcity. He pointed out that the crypto market cycles were “much bigger” than the tech stock cycles. Pal added,
“[Crypto is] a technology you can participate in directly. Crypto cycles can be much, much bigger because you’re actually owning the network itself. That’s why it’s so powerful [and] it tends to outperform the other technology stuff.”
Further explaining his thesis, he said that when it comes to AI, the only thing that investors can do is buy stocks like Nvidia, Microsoft, etc. Buying a share in trillion-dollar companies would fetch investors returns, but when compared to crypto assets, their ROI would be comparatively insignificant.
Also Read: SPX Gearing to Create 22 Year Bearish Record: Will Bitcoin Follow?
Is it Time to Expect a Bitcoin Recovery?
In a recent blogpost, Pal charted out a couple of interesting scenarios. Bitcoin’s 30-day historical volatility has dropped below 20 for the first time since January 2023. This level has always helped the asset produce ”huge moves” in the 2-4 month window. Revealing how Bitcoin has reacted to similar situations in the past, the blog post revealed,
April 2016: +83% in 2 months
October 2016: +85% in 2 months
March 2019: +214% in 3 months
July 2020: +102% in 4 months
January 2023: +85% in 3 months
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The Bitcoin market is currently experiencing a volatility deficit. The price of the asset has stagnated around $26,000. Owing to the absence of a directional bias, traders have been waiting on the sidelines without participating in the market proceedings. Pal pointed out that Bitcoin’s Bollinger Bands are currently the ”tightest” on record. Revealing how Bitcoin reacted the last time it was in a similar position, Pal wrote,
“Only one other month historically have we ever been below 25, which was back in April 2016. Back then, Bitcoin went on to rally 44x into the 2017 high.”
Source: Raoul Pal Substack
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