Real Vision CEO Raoul Pal is weighing in on the crypto forecast after weeks of wild swings in the markets.
In a series of tweets, the macro guru tells his 827,000 followers why he thinks sentiment towards digital assets has suddenly turned bearish, then suggests what investors can do in both the short and longer term.
I do think crimped excess disposable income due to inflation is partially to blame [for the bearishness].
Many are scarred by past cycles when this point in the halving cycle produced the top.
But past damages to your psyche can also cause you to be excessively cautious…”
Pal reminds crypto investors that prices have returned to their May 2021 levels, despite the dramatic moves up and down in the intervening months. He believes that further mainstream adoption is still to come and will also be embraced by different creative industries.
“We haven’t seen a blow-off top with record participation. We have seen speculation of some size in NFTs [non-fungible tokens], but that is mainly people who already have Ethereum and have profits to burn.
Meaningful institutional adoption is underway, along with exponential new use cases. Plus a rising realization of the importance of Web 3.0 by artists, musicians and brands.
Some sort of tipping point has been reached… And I think it accelerates later this month and well into next year… 2022 is the year I think the BIG herd arrives.”
Looking ahead to 2022, the former hedge fund manager thinks that as traditional financial institutions allocate resources into the digital assets space, new energy and participation will follow.
“Funds will be allocating fresh [profit and loss] and new mandates in Q1 and if that drives prices sharply higher, it will bring record new wallets, etc., and long-term holders will begin to put coins on exchanges to top slice.”
When it comes to actionable moves to take while waiting for the market to reheat, the CEO says he’s looking at the top crypto assets Bitcoin (BTC) and Ethereum (ETH), as well as the altcoins Terra (LUNA), Avalanche (AVAX) and Solana (SOL).
“If you want to use leverage, add small premiums in options that you can write off.
Layer-1’s of BTC, ETH, LUNA, AVAX and SOL are the better core holdings.
NFTs are most speculative but are also innovating fast so have a bit of that too.”
At time of writing, Bitcoin is up 3.65% on the day to $48,354, but still below its weekly high of $50,800 on Sunday.
Leading smart contract platform Ethereum is also up slightly today to $3,861, but also below its weekly peak of $4,229 on December 10th.
The Terra protocol’s native token LUNAunderpins a suite of decentralized stablecoins. The 11th-ranked crypto is up 12.6% today to $59.91.
Layer-1 smart contract platform Avalanche is also rallying nicely after falling to as low as $75.63 on Monday. At time of writing the AVAX token is up 10.1% to $89.01.