Raoul Pal, CEO of Real Vision, is optimistic about the future of risky assets such as cryptocurrencies, given the diversification he sees in the macroeconomic environment.
As Raoul Pal explains, a slowdown in the Federal Reserve’s rate hikes could be the catalyst for both traditional and cryptocurrency markets.
Last year, the Fed’s anti-inflation strategy led to four consecutive 0.75% rate hikes, while December’s hike was in the 0.50% range.
Raoul Pal reported:
“I’m actually very optimistic. Now, the recovery from a bear market comes in two ways: it comes, it corrects, and eventually it comes stronger. It depends on the actions of the central banks, liquidity and things like that.
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But looking forward, I’m very optimistic because we just went through the interest rate cycle, so that can’t happen again… It’s the change in the level of interest rates that matters. The rate of change in the level of interest rates is first going down and then it stops. So this is good for risk assets.
As inflation has begun to loosen its grip on the economy, Pal predicts that the rate of interest rate increases will continue to slow, which he believes is positive for the cryptocurrency markets, as well as other markets.
Raoul Pal continued by saying:
“It seems that the burden of inflation is lighter now, so the Fed is making it pretty clear that they are likely to make a decision to raise rates by 25 basis points. In the global macro, what matters more than anything else is the rate of change in interest rates. If the rate of change in interest rates changes, then all of these… balls of water start to rise out of the water that have been held back by the great weight of the amount of interest rate increases. All that is over. So emerging markets are going up, gold is going up, cryptocurrencies are going up, and stocks are going up. That’s the story.”