Former Goldman Sachs executive Raoul Pal says he is very bullish on Ethereum (ETH) and cryptocurrency markets, despite uncertain price action in recent months.
In a new interview with cryptocurrency analyst Scott Melker, Pal says crypto hedge funds that took big losses during the recent market turmoil are underweight ETH as The Merge approaches, Ethereum’s transition to a consensus mechanism. proof-of-stake.
The founder of Real Vision says the markets take the most painful path and for ETH right now that means upside.
“I think everyone is still underweight on The Merge. People will enter the union or after the union, we will get this peak [and] we will probably have a retreat. Many people will say ‘Look, it’s getting back to idle.’ My guess is that it corrects sideways, does something, goes back in the range for a while and then we explode higher.
So I’m very bullish right now. In the short term, we are getting close to overbought, but I think we just had a fix and I believe we will try again. What’s fascinating is seeing the futures market and the futures markets is that everyone is hedging the ETH merger risk so that buying ETH and selling futures now, someone will lift that hedge at some point.
I find this setup really interesting and I know that cryptocurrency hedge funds are all underweight because they have all been beaten so hard. So they bought calls as a way to get something on The Merge so they wouldn’t get beaten up by their investors. So when you see that kind of configuration, the pain path is even higher. “
The macro guru says the relative underperformance of cryptocurrencies this year can be attributed to an unexpected tightening of central bank liquidity, which he previously predicted will change.
“From my point of view… I think the macro is the most important thing that actually took most of us by surprise. Not that the macro took us by surprise, but the impact it has on cryptocurrencies. First, when you have negative real wages, people have less money than the average dollar cost. It is still a retail investment market. So the other thing is that central bank liquidity is withdrawn, and if you look at the year-over-year charts of M2 versus Bitcoin, they are basically the same. It tells you that when the money goes out of the system, there is less money around. “
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