Pal suggests markets are about psychology
Markets take the path of most pain
Institutional inflows, Ethereum ETFs, and ETH 2.0 could drive crypto prices in March-June 2022
Raoul Pal, the founder and CEO of Real Vision, says the market would be wrong to go with historical perceptions while predicting the end of crypto’s current bull cycle.
Bitcoin (BTC), and the broader crypto market rose spectacularly in 2013 and again in 2017, reaching landmark price levels that helped shine a light on the emerging sector. In both cases, however, the cycle ended around December- with some analysts suggesting a similar trend in 2021.
But Pal is warning against this, noting in an interview that this won’t be the case during this year’s market cycle.
“Markets are all about psychology, and if everyone expects something to happen, it won’t happen. So everybody’s kind of got in their heads that the cycle ends in December because that’s what it did in ‘13 and that’s what it did in ’17,” he noted.
Crypto investor to be ready for ‘path of most pain’
The investment strategist then went on to give his view on what could happen with Bitcoin, Ethereum, and other major altcoins over the next few months. According to him, the crypto market is set to descend into a sell-off before bouncing back to reach record highs.
“My guess is that we probably have a sell-off, and then it rips again because that is the path of most pain and markets tend to take the path of most pain,” he said in the interview.
The market recently surged on the approval of the first Bitcoin-based exchange-traded funds in the US. Greater retail and institutional adoption are also behind recent spikes in crypto prices.
He explained why institutions could be key to a bullish phase between March and June next year.
“Institutions tend to make asset allocation decisions by quarters, and my guess is January to March quarter next year we’re going to see a huge inflow.”
Ethereum’s ETH 2.0 critical to a new bull phase
Pal sees a regulatory clearance for an Ethereum ETF and the launch of ETH 2.0 as the other two key drivers of the next phase of the bull cycle. He notes that staking is big with ETH 2.0 coming.
“It’s creating this incredible supply and demand imbalance in ETH where there’s only about 11% of the total ETH supply available. Everything else is locked up for this staking.”
According to the Real Vision CEO, it’s these factors that could see the broader crypto market extend its bull cycle from around March to June.
Bitcoin has edged lower since touching highs of $67k in October, while Ethereum stole the crypto show with a march to highs above $4,600 this week. Bitcoin is trading near $61,700 as of writing, with Ether’s price also lower around $4,510.