Real Vision CEO Raoul Pal said that despite the recent price weakness, the cryptocurrency cycle is not over and the market is still in the middle phase. According to Pal, a former manager of Goldman Sachs, the decisive factor in the last retreat was the shrinkage of excess liquidity in global markets.
Liquidity flow came to the fore again
Pal stated that during the period when excess liquidity decreased, capital shifted to artificial intelligence-related areas. According to him, when there is no additional liquidity in the markets, investors turn to areas where returns increase faster.
Raoul Pal stated that when there is not much liquidity, capital flows to areas with the fastest growth potential, and recently this has been observed on the artificial intelligence side.
Pal stated that now, excess liquidity on both the M2 money supply and broader monetary indicators has turned positive again. He argued that this change could again support the inflow of money into digital assets. Real Vision is known as a financial media and research platform focusing on macroeconomics and asset markets.
Pal emphasized that excess liquidity has been re-established and this supports investment conditions.
The experienced investor described the current outlook not as a top, but as the middle part of the cycle. He supported this view with Bitcoin’s long-term logarithmic regression channel. According to him, Bitcoin is trading 1.5 standard deviations below its fair value, indicating oversold territory.
Technical signals for Bitcoin, Ethereum and SUI
Pal said that similar levels stood out as accumulation areas in past cycles. He reminded that there were recoveries following the similar technical outlook seen in the 2015, 2018 and 2022 periods. However, he added that such models do not give precise timing. Bitcoin traded at approximately $59,500 as of June 26.
Stating that monthly DeMark indicators on the Ethereum side point to a possible return setup, Pal said that SUI is approximately 1.8 standard deviations below the trend channel.
Mini dictionary: DeMark indicators are technical analysis tools used to monitor trend fatigue and possible reversal points in the markets. The regression channel helps measure how much the price has deviated from the long-term trend line.
Pal states that when viewed with adjusted metrics, the risk-return balance seems quite strong in favor of crypto assets.
Pal compared this chart to semiconductor stocks. While he said that the semiconductor side was approximately 3.8 standard deviations above the trend and gave an overbought appearance, he stated that crypto assets remained at relatively lower valuations.
Layer one focuses on networks
Pal explained that he continues to focus on Ethereum, Solana and SUI. He said that these networks function as a coordination layer for digital economies, and that artificial intelligence systems will also need blockchain infrastructure. For this reason, he explained that he reduced the weight of high growth stocks and semiconductors in his portfolio and turned to tier-one assets, which he thought were lagging behind in valuation.
Dollar and interest rate outlook may be decisive
According to Pal, the factor that affects cryptocurrency prices the most is global liquidity. Stating that the correlation between Bitcoin and global liquidity trends is between 85 percent and 87 percent, Pal said that there has been an increase in liquidity since 2022.
On the other hand, Pal noted that the strong US dollar limits liquidity expansion and thinks that the dollar may also weaken if interest rates decline. He stated that in such a scenario, the available capital in the markets could increase, which could support the demand for crypto assets. He also said that asset leadership may change in the next market phase and today’s prominent areas may lose weight.
