IMPORTANT UPDATE! Don’t Buy Any Crypto Until You Know What’s Happening – Raoul Pal

IMPORTANT UPDATE! Don’t Buy Any Crypto Until You Know What’s Happening – Raoul Pal

so what’s going on now why is crypto so shaky it’s the same reason Tech’s been shaky it’s liquidity stupid liquidity is the Big Driver of all asset classes and particularly crypto it’s the most receptive to liquidity injections or withdrawals so I correctly managed to time the bottom in 2022 based around the liquidity cycle and the forward-looking elements of the liquidity cycle continue well into 2025 so I don’t have anything to concern over so therefore we’re looking at The Wiggles in liquidity when Bitcoin Rose to a new all-time high of over $73,000 in March more than a full month before the periodic Haring event many people expected that the unprecedented demand from the spot Bitcoin exchange traded funds would continue to push prices to new highs or at least hold them steady above $70,000 however the going has not been as good as expected instead of new all-time highs and massive gains the cryptocurrency market has been experiencing quite a lot of turbulence according to Raul pal a renowned macro analyst crypto Enthusiast and former Goldman Sachs executive the cryptocurrency market has been negatively impacted by global liquidity conditions which have been especially worsened by the federal reserve’s tightening policy while pal believes the turbulence could last for a while longer he is certain that the FED will soon ease up on the tightening then swiftly announce a policy reversal that will among other things restart the crypto bull market since at at least last year pal has an important warning sladice for cryptocurrency investors don’t this up hold don’t use leverage expect and ignore draw downs and watch patiently as this entire Market gets bigger than we can imagine pal has preached this message again and again in the past year in his latest video broadcast pal gives a much needed update about the current state of the bull market and what we can expect going forward as we bring you clips from Pal’s highly insightful video please take a little time to like this video subscribe to the channel and turn on post notifications for more videos like this you can also join the conversation by dropping your comments and observations in the comments section below everything you do helps with the YouTube algorithm and immensely contributes to the Channel’s growth thanks and enjoy the video in the last 12 months you’ve probably forgotten this but this is our fifth or sick 20% pullback in Bitcoin so you’ve dealt with this many times before you just kind of forget it which is weird and I think coinbase put out a super interesting tweet which was there have been five Bitcoin bull markets in an average bull market you’ll have to survive the following to ride it to the top 6 5 to 10% draw Downs 3 10 to 20% draw Downs 2 20 to 30% 130 to 40 140 to 70 and that’s all during a bull market so it takes a certain kind of gumption it takes an ability to turn off Twitter to turn off your screens and say has my thesis changed change is the adoption of this technology stopping is there any other reason that it’s going to slow down where are we in the business cycle I SP enormous amount of time trying to educate educate you guys that this is a macro asset is driven by the business cycle just happens to be forward-looking like technology stocks and it’s driven by the liquidity cycle so has something changed in the business cycle that would tell us that we’re going to have a failed crypto cycle well in all probability that’s a no so therefore it’s corrective price action and if you happen to have extra money on the sidelines use these corrections to add that’s what I did I was lucky enough to have a bit of cash um and I added to my SL position great uh and I found that that compounds really well over time it’s a key way to make better returns out of this space is use the draw Downs to your advantage even the big cyclical ones I didn’t sell out of anything last time I had no intention of it wasn’t that I missed the top or anything else I knew that to get back in is really hard if you take X some out you never put X some back in again you go smaller because you don’t want to risk it all your whole psychology is screwed up so what I prefer to do is say well this is a longer term trade when we get the big draw Downs I just want to add and then you compound and you’re back to all-time highs well before the market is and that is really really a superpower so what’s going on now why is crypto so shaky it’s the same reason Tech’s been shaky it’s liquidity stupid was happening if you think about the US liquidity it’s driven by the fed’s balance sheet which they’ve been doing QT so they’ve been tightening it making liquidity less available but that’s been offset by the by the treasury now by the draining of the reverse repo the reverse repo is an offset to what the QT was doing in the meantime the other part of the equation is the treasury general account which is the checkbook of the US government that Janet yel controls and she’s been building that but these have meant the liquidity based back in 2022 and it’s been going vaguely higher the everything code cycle taught you that there is no way of financing the debts it’s now become a word people use fiscal dominance this is the everything code cycle I started talking two years about the everything code cycle says well if GDP growth is too slow then the amount of debt in the system um is too high so you need either interest rates to come down or you need growth to go up now growth is driven by demographics over time there’s not much we can do about that you get cyclical growth but you don’t get the overall trend row growth which has been slowing so the available GDP has to pay the interest on the debt between the government sector that’s 100% of GDP in debt and the private sector that’s 120% in debt so we’ve got not enough GDP to cover the interest payment this gets really exacerbated when interest payments are high Trend rate of GDP growth is about 1.75% call 2% uh whilst um interest payments right now are let’s say two-year bonds are 5% okay and then if you double that Tak into account the private sector you’ve got 10% of interest payments and and nominal GDP growing at whatever it is is five so there’s not enough GDP which is why the bum Market’s been freaking out earlier this week the FED said that beginning in June it will slow the pace at which it allows maturing Bond proceeds to roll off its balance sheet without reinvesting them this means the FED will be slowing down on QT according to experts this is a backdoor easing of monetary policy signifying that the FED knows it must cut and start easing as soon as possible but the central bank is dragging its feet to fool the market for a little More Time Pal believes the deceit can only last for a little more time soon the FED will be forced to come out outright with its plans and when that happens crypto asset prices will soar significantly let’s get back to Pal’s video this is the issue of not having enough GDP growth this is the everything code cycle so what it leads to is what known as more cowbell which is stimulus stimulus can come in a number of ways so the most obvious way is reducing interest rates themselves that has been a typical path the other way is the backdoor mechanism of injecting liquidity into the system quantitative easing is the best known one the other one is draining the reverse repo and also draining the treasury general account so those are tend to be those and then there’s some more coming and I’ll come into that in a sec so where are we today why did we have the air pocket well QT was going on so they’re selling bonds the treasury had started building up cash reserves because tax payments have come into the system they come out of bunny Market funds and go into Janny yellen’s checkbook checking account and that’s taken liquidity out of the system because she hasn’t spent it yet so it’s just sitting there she’s been trying to help the market by issuing short dated bonds that’s drained the reverse reput but now today the markets reverse very quickly on another piece of news the other piece of news was Jay PO said hey we don’t want to sell as many bonds quantitative tightening which is we’re going to ease liquidity condition Janet on the other hand hasn’t said that she’s going to issue more short-term bonds yet well it’s a bit impossible because the reverse repo is is almost drained anyway she’s going to wait till closer to the election to unleash her checkbook and throw out money to everybody and she will do that and that will come in the second half of the year so what she’s done is another bit of magic she said what what I’m going to do is I’m going to keep issuing these short ofd bonds and I’m going to buy back some longer dated bonds and it’s the the liquid off the off the Run ones but really it’s a recycling of liquidity it’s adding liquidity into the system so Janet started to add liquidity and Jay is making sure that he takes less liquidity out of the system the reverse repo almost rained there’s a bit more to go but then it’ll come down to Auntie Janet and she will then start throwing her checks around and handing out money there’s another piece of magic coming for next year that’s not on people’s radar screens which is basil 4 Basel four the Basel Agreements are basically Bank capitalization regulations after the banking crisis they impose Basel 3 which meant people had to hold more regulatory Capital that is code word for owning more government bonds they’re going to Basel for is going to tighten that uh even further so they’re going to force the US the UK and the European Banks to hold more government bonds how convenient because you need a buer of the bonds to add liquidity into the system and so that is coming it starts with Europe I think in January 2025 and the US and the UK will come by about June July uh 2025 so there’s liquidity coming in the system at a structural level I they creating another larger buyer of bonds we will see more of those kinds of things over time and we’re going to get much more liquidity but this is just the FED over in uh Europe well the ECB want to start cutting rates soon that’s going to start injecting liquidity into the market they’re also still planning their big green energy initiative to lower the cost of electricity in Europe which is actually good for productivity in the UK is similar they bow up their guilts market last year uh they will do some injection of liquidity for sure whether it’s via rates or whether they can find a backd door excuse to do something else obviously Basel four for all of these helps Japan Japan has got a real problem on its hands its currency is falling fast um and there’s very little they can do they don’t want to raise rates too much because their GDP is too slow they’ve got the everything code issue at hand as well so they’ve got this problem China’s also got the same problem it’s starved of dollars um it has a bunch of dollar debts it has a debt deflation going on particularly in the property sector um it’s an unbalanced economy they need dollars and they can see Japan losing control of its currency they’re nervous about that Janet yellen’s been over there twice because she’s worried that if China devalues they’re going to dump deflationary Goods onto the US and create other problems so somewhere here there needs to be an injection of dollar liquidity into the system whether that’s by swap lines or some other backdoor mechanism to alleviate the strength of the dollar we are in the thick of a cryptocurrency bull market but like everything crypto that means quite a bit of volatility just enough to cause 20 to 30% draw downs but nothing that’ll leave any permanent damage according to the coinbase Tweet Raul pal references in his video hodling means taking the price declines in your stride both during the bare and bull markets and knowing that your patience will be handsomely rewarded in the long term so you think you can huddle here’s what it means the first post reads crypto bull cycles hit different the past two bull markets lasted 3.5 years we are 1.5 years in the past two bull markets saw prices increase 113 X and 19x prices have increased 4X there have been five Bitcoin bull markets in an average bull market you will have to survive the following to ride it to the top 65 to 10% draw Downs 310 to 20% draw Downs 220 to 30% draw Downs 130 to 40% draw down and 140 to 70% draw Downs all during a bull market when do you think liquidity conditions will turn and how do you expect it to impact Bitcoin and other cryptocurrencies please share your thoughts comments and observations in the comment section below also ensure you give this video a thumbs up subscribe to the channel and turn on the notifications Bell for more videos like this thanks for watching

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Credit: Raoul Pal The Journey Man
Don’t Panic! Raoul Pal’s Urgent Crypto Market Update

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