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Raoul Pal, CEO of Real Vision, believes the crypto markets have not yet peaked and that a new rally is likely in the first quarter of 2022. Large institutional investments are a probable catalyst before the market accelerates.
Raoul Pal, founder and CEO of Global Macro Investor, has said that people who are extremely worried about the crypto market’s recent struggles should recognize that the situation has not fundamentally changed.
He argues much of the recent selling pressure stems from investors taking new positions and rebalancing, after what he calls “a very good year for asset ownership.”
Bitcoin climbed to $69,000 in early November, and many other leading cryptocurrencies gained momentum as regulatory headwinds eased when the U.S. Securities and Exchange Commission approved the first futures-based exchange-traded funds in the United States.
Since then the market has cooled, with Bitcoin falling below $50,000 and reflecting a broader pullback observed over the past month. Some analysts suggest the market is on the verge of a sustained bear phase, but many others, including Real Vision’s CEO, disagree.
Pal noted that most investors understand cryptocurrencies generally “haven’t gone anywhere since May,” apart from the fortunate few who managed to ride the earlier surge.
He also pointed out that the bullish run from July’s lows left most crypto assets trading well below their year-ago highs.
“But we haven’t seen explosive retail participation,” Pal wrote in a Twitter thread on Tuesday. “We’ve seen some NFT speculation, but that’s mainly from people who already have Ether and profits to burn.”
The investment strategist added that the industry is seeing meaningful institutional adoption and a spike in new use cases. Those trends should lead investments made in the first quarter to push prices higher. If that happens, Pal believes the market could experience a dramatic inflow of fresh capital and further upside for cryptocurrencies.
His advice is to “sit tight, buy the dips, and if we see another sharp rally, reduce speculative holdings and shift toward higher-quality assets.”
Most of all, don’t get stressed by shorter term moves if you are playing the long game.
If it stresses you, you are too big and it matters to your overall life plans too much.
We all have a lot riding on this but you can’t weep if it goes down 50% and chops for a year
— Raoul Pal (@RaoulGMI) December 14, 2021
Pal also believes the market is preparing for a new investment phase, shifting focus from retail to institutional use. This scenario has been slowly building much of the year, and he expects the “bigger players” to become genuinely active during 2022.