Macro guru Raoul Pal is naming the three conditions that could give the crypto markets a healthy boost after enduring months of rocky price action.

In a new interview on the Real Vision YouTube channel, the former Goldman Sachs executive says that the Fed’s tight monetary policies are already priced into the crypto markets.

“The pain of tightening is already in the market, so the probability is that the other side of the recession where conditions loosen is the thing that eventually gets priced in… The crypto markets, and I showed that with M2 [money] chart, have priced in this full thing so it’s already there.”

Last month, the Federal Reserve raised interest rates by 75 basis points.

Pal says that the lowering of commodity prices, reduction in yields and the topping out of the US dollar could “absolutely” benefit risk-on assets including crypto.

“I think the low is close. Whether it’s in or not, I can’t tell, but I know from all of my economic work and I’ve probably got maybe 200 charts to back up all of the stuff I showed, that suggest the balance of probabilities are, that a lot of this has been priced, that the inflation problem is probably a thing of the past, and that economic growth is going to fall sharply.

What happens when economic growth falls sharply is we now have this Pavlovian instincts of the market looking forward and saying ‘The Feds are going to pause and monetary conditions are going to ease…’

So if yields start coming lower, commodities start coming lower and the dollar eventually tops out, which is not clear that that’s going to happen yet, but at some point it will, then you’ve got all of those reversing and that tells you that, usually, that’s when the Fed have started reversing course as well.”


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