- According to a former Goldman Sachs executive, the price actions of the two leading digital assets tend toward historical signals.
- Pal states that the crypto market is about to begin a boredom phase, which usually indicates the start of a new bullish run.
Macroeconomics expert and a former Goldman Sachs executive, Raoul Pal, explained that the price action of BTC and ETH are about to create history. He explained that both digital assets are at crucial support levels. Pal told his 991,000 followers on Twitter that BTC has reached the peak of its oversold region.
Thus, long-term investors have a good chance of buying the dip now. “Based on the long-term trend on the Metcalfe’s law adoption curve at two standard deviations, BTC’s cyclical low is at its most oversold territory ever.” According to Metcalfe’s law, a network’s value is directly proportional to its number of users.
Pal explained that this adoption rate for Ethereum has reached a critical support level. He added that ETH’s current price lies on the long-term log uptrend of the Metcalfe adoption curve. Pal, also the co-founder of the Real Vision Group, stated that the amount of dollars in supply circulation or USD liquidity largely determines the prices of crypto assets.
He added that it is no wonder that the ongoing crypto winter and the sharp decline in global liquidity are happening simultaneously. However, Pal believes this trend will be reversed soon as central banks no longer have a choice but to change their hard stance on aggressive rate hikes. “Global liquidity is about to experience a massive change based on the effects of the recession and a change of policies by central banks.”
The start of a boredom phase and a bullish run
Pal argues that the crypto market is about to begin a boredom phase, which usually indicates the start of a new bullish run. However, he cautioned investors not to expect this phase to be exact. Instead, what is important is the context behind this phase. The former Goldman Sachs executive further explained that crypto cycles involve an increase in positions following the end of a long-term uptrend.
During this phase, investors’ fear and disgust are at their peak. However, a boredom phase follows this fear and disgust phase. Pal also said the boredom phase is a period of coming to terms with the market’s good and bad news. Then, extracting vital lessons from these events. He added that there is zero leverage during this period, and everyone can start afresh.
Pal further said he’s noticed that previous episodes of low 30-day realized volatility often coincide with lows in the crypto market. According to him, this magic level for BTC is currently at 20 percent. Each time BTC reaches this level, it usually precedes a more significant leg higher in an early bull market. He added that ETH currently has a similar structure. However, ETH’s crucial 30-day level is at 40 percent compared to BTC, which is at 20 percent.
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