Don’t Panic! Raoul Pal’s Urgent Crypto Market Update

Don’t Panic! Raoul Pal’s Urgent Crypto Market Update

hi everyone Ral pal here and this is my show the journey man well actually this is a quick update um I want to try some of these to see if they help you and there’s a lot going on in crypto right now so here’s something for you now don’t forget please subscribe to the channel uh comments below I do read the comments I will reply um I just want to make sure we build a community here and the more that you subscribe to the channel the easier it is to book guests stuff like that so please please please just subscribe to the channel anyway enjoy the quick piece I hope you find it useful the idea is Don’t Panic join me R pal as I go on a journey of Discovery through the macro cryto and exponential age landscapes in the journey man I talked to the smartest people in the world so we can all become smarter together hi everyone Ral pal here and my show the journeyman I thought I’d give a short update I’m not really done one of these before um but I thought it’d be helpful to people I want to talk a little about the crypto Market because I know people get concerned they see sell-offs many people are new to the market and I thought I’d try and give some guidance as I’ve always said is crypto markets are volatile by Nature it’s a 70% volatility asset class it has deep draw downs and it has tremendous upside in fact it’s the best performing asset class in all recorded history but with that best performance comes volatility it’s something I warn about in this don’t this up thesis which is don’t take leverage don’t try and trade around or fomo into stuff just be careful what you do and stick to the basics stick to the bigger tokens if you’re going to Degen into stuff do it in the smaller stuff because that stuff’s much more volatile your probability of getting it wrong is very high although you can get 100 x in the space as well understand that’s attractive to many people but I’m trying to keep everybody on the straight and narrow and when you see these draw Downs it always feels terrible and I’ve been doing this since 2013 and they always never feel great but the reality is it’s normal so it’s normal in the fact that in the last 12 months you’ve probably forgotten this but this is our fifth or sixth 20% pullback in Bitcoin so you’ve dealt with this many times before you just kind of forget it which is weird and I think coinbase put out a super interesting tweet which was there have been five Bitcoin bull markets in an average bull market you’ll have to survive the following to ride it to the top six 5 to 10% draw Downs 3 10 to 20% draw Downs two 20 to 30% 13 to 40 40 to 70 and that’s all during a bull market so it takes a certain kind of gumption it takes an ability to turn off Twitter to turn off your screens and say has my thesis changed is the adoption of this technology stopping is there any other reason that it’s going to slow down where are we in the business cycle I spend enormous amounts of time trying to educate educate you guys that this is a macro asset and is driven by the business cycle just happens to be forward-looking like technology stocks and it’s driven by the liquidity cycle so has something changed in the business cycle that would tell us that we’re going to have a failed crypto cycle well in all probability that’s a no so therefore it’s corrective price action and if you happen to have extra money on the sidelines use these corrections to add that’s what I did I was lucky enough to have a bit of cash um and I added to my salana position great uh and I found that that compounds really well over time it’s a key way to make better returns out of this space is use the draw Downs to your advantage even the big cyclical ones I didn’t sell out of anything last time I had no intention of it wasn’t I missed the top or anything else I knew that to get back in is really hard if you take X Su out you never put X Su back in again you go smaller because you don’t want to risk it all your whole psychology is screwed up so what I prefer to do is say well this is a longer term trade when we get the big draw Downs I just want to add and then you compound and you’re back to all-time highs well before the market is and that that is really really a superpower so what’s going on now why is crypto so shaky the same reason Tech’s been shaking it’s liquidity stupid remember I’ve told everything about this everything code site and those of you in real Vision Pro um macro and even Pro crypto Kevin Kelly and myself talked about it yesterday in Pro crypto liquidity is the Big Driver of all asset classes and particularly crypto it’s the most receptive to liquidity injections or withdrawals so I correctly managed to time the bottom in 2022 based around the liquidity cycle and the forward-looking elements of the liquidity cycle continue well into 2025 so I don’t have anything to concern over so therefore we’re looking at The Wiggles in liquidity and those of you who follow Mike how who’s on real Vision frequently he also follows liquidity he’s probably the expert on liquidity and he talks about the liquidity air pocket that I’ve looked at as well the liquidity air pocket was happening if you think about the US liquidity it’s driven by the fed’s balance sheet which they’ve been doing QT so they’ve been tightening it making liquidity less available but that’s been offset by the by the treasury no by the draining of the reverse repo the reverse repo is an offset to what the QT was doing in the meantime the other part of the equation is the treasury general account which is the checkbook of the US government that Janet yell controls and she’s been building that but these have meant the liquidity based back in 2022 and has been going vaguely higher the everything code cycle taught you that there is no way of financing the debts it’s now become a a word people use fiscal dominance this is the everything code cycle I started talking two years about the everything code cycle says well if GDP growth is too slow then the amount of debt in the system um is too high so you need either interest rates to come down or you need growth to go up now growth is driven by demographics over time there’s not much we can do about that you get cyclical growth but you don’t get the overall trend R growth which has been slowing so the available GDP has to pay the interest on the debt between the government sector that’s 100% of GDP in debt and the private sector that’s 120% in debt so we’ve got not enough GDP to cover the interest payments this gets really exacerbated when interest payments are high Trend rate of GDP growth is about 1.75% call it 2% uh whilst um interest payments right now are let’s say two-year bonds are 5% okay and if you double that to take into account the private sector you’ve got 10% of interest payments and a nominal GDP growing at whatever it is five so there’s not enough GDP which is why the bond Market’s been freaking out um over time yields have have risen even though the FED have been talking about cutting rates and this is the issue of not having enough GDP growth this is the everything code cycle so what it leads to is what known as more cowbell which is stimulus stimulus can come in a number of ways so the most obvious way is reducing interest rates themselves that has been a typical path the other way is the backdoor mechanism of injecting liquidity into the system quantitative easing is the best known one the other one is draining the reverse repo and also draining the treasury general account so those are tend to be those and then there’s some more coming and I’ll come into that in a sec so where are we today why did we have the air pocket well QT was going on so they’re selling bonds the treasury had started building up cash Reserves because tax payments have come into the system they come out of bunny Market funds and go into Janet yellen’s checkbook checking accounts and that’s taken liquidity out of the system because she hasn’t spent it yet so it’s just sitting there she’s been trying to help the market by issuing short-dated bonds that’s drained the reverse repo but now today the markets reverse very quickly on another piece of news the other piece of news was Jay PO said hey we don’t want to sell as many bonds quantitative tightening which is we’re going to ease liquidity conditions Janet on the other hand hasn’t said that she’s going to issue more short-term bonds yet well it’s a bit impossible because the reverse repo is almost drained anyway she’s going to wait till closer to the election to unleash her checkbook and throw out money to everybody and she will do that and that will come in the second half of the year so what she’s done is another bit of magic she said well what I’m going to do is I’m going to keep issuing these shorter dated bonds and I’m going to buy back some longer dated bonds and it’s the the liquid off the off the Run ones but really it’s a recycling of liquidity it’s adding liquidity into the system so Janet started to add liquidity and Jay is making sure that he takes less liquidity out of the system the reverse repos almost drained there’s a bit more to go but then it’ll come down to Auntie Janet and she will then start throwing her checks around and handing out money there’s another piece of magic coming for next year that’s not on people’s radar screens which is Basel 4 Basel 4 the Basel Agreements are basically Bank capitalization regulations after the banking crisis they impose Basel 3 which meant people had to hold more regulatory Capital that is code word for owning more government bonds they’re going to Basel 4 is going to tighten that uh even further so they’re going to force the US the UK and the European Banks to hold more government bonds how convenient because you need a bar of the bonds to add liquidity into the system and so that is coming it starts with Europe I think in January 2025 and the US and the UK will come by about June July uh 2025 so there’s liquidity coming in the system at a structural level I.E they’re creating another larger buyer of bonds we will see more of those kinds of things over time and we’re going to get much more liquidity but this is just the FED over in uh Europe well the ECB want to start cutting rates that’s going to start injecting liquidity into the market they’re also still planning their big green energy initiative to lower the cost of electricity in Europe which is actually good for productivity I know people think it’s a waste of money throwing money around a green um energy activities but it’s not because over the time you’ll Force down the cost of electricity um and that increases productivity and that helps GDP grow but in the meantime they will end up financing more of this with issuing green bonds or whatever it is there’s going to be a way that they will inject liquidity via this as well because they don’t want to use the balance sheet if they can avoid it because everyone knows what the balance sheet is the printing of money okay so Europe’s probably in the equation the UK is similar they BW up their guilts market last year uh they will do some injection of liquidity for sure whether it’s via rates or whether they can find a backdoor excuse to do something else obviously Basel 4 for all of these helps Japan Japan has got a real problem on its hands its currency is falling fast um and and there’s very little they can do they don’t want to raise rates too much because their GDP is too slow they’ve got the everything code issue at hand as well so they’ve got this problem China’s also got the same problem it’s starved of dollars um it has a bunch of dollar debts it has a debt deflation going on particularly in the property sector um it’s an unbalanced economy they need dollars and they can see Japan losing control of its curreny they’re nervous about that Janet yellen’s been over there twice because she’s worried that if China devalues going to dump deflationary Goods onto the US and create other problems so somewhere here there needs to be an injection of dollar liquidity into the system whether that’s by swap lines or some other backd door mechanism to alleviate the strength of the dollar I think that’s going to come as well um so that’s and China itself will probably inject liquidity into its system in some way shape or form everyone’s been asking them to do so they will have to do something over time but they can’t H do it with the US interest rates so High because if not currency goes so it’s this problem there’s a bit of negotiation we got a G7 meeting uh coming up in um May so um we may see some noise around um um foreign exchange markets and some change there so look for a change of sentiment coming out of that look for a change of sentiment coming out of the bond market Jay was very cautious not to say we’re going to be raising rates he really really wants to cut rates because they know they have to to finance the deficits that air pocket of Janet’s bank account growing and J doing QT had caused a decline in liquidity that decline liquidity is what caused the decline in crypto now Jay went clearly today to say they want to reverse some of that and Janet’s going to start reversing some of that then she’ll start spending it so the forward-looking basis liquidity is going to come back is it going to be this month or next month I don’t bloody know it doesn’t really matter because we’re not in it for the short-term trade what we know is it has to come back because of the everything code and the financing of it if you’ve not seen what the everything code is then please go through uh the Youtube channel or on the real Vision platform and look for the everything code that big interview I did with Nathaniel witmore I also lay it out in my um end of 2023 address um there also the crypto address that’s on uh that was uh last month it’s all there so please go through take some notes have a look at that on the real Vision platform you can take these amazing notes you can share them the community can see them so make sure you have a look at those as well start thinking this thing through start preparing for where this is the next phase usually happens around this harving period the next phase is when the banana Zone happens that’s when everything starts accelerating so often we have a slower drag up and then we start going that’s what I think happens that’s the altcoin season that’s when things start to get really bananas um I’m looking forward to that I’ll keep you posted as that starts playing out but right now we should be looking for low in markets as liquidity is signaled to improve and liquidity will start to improve um and then as we go from that we can look at okay how long do this cycle last for but the back end of this year it’s all going to be about bribing election making sure you can pay the deficits and that’s pretty much everywhere everyone’s got to pay the same bills which is the cost of their government debt and there’s only one way around and that’s more cowbell anyway nothing to worry about pretty ordinary markets um it’s just something you have to get used to in crypto so keep the faith stay safe out there bye okay as you can see liquidity is the game here and liquidity was kind of baked in the cake this is just a normal correction we carry on business as usual now if you want to know more about how to invest in crypto well firstly subscribe to the channel I’ve asked you to do that already and I know 50% of you haven’t subscribed so I’d appreciate that if I add any value at all uh secondly we’ve launched a new service at real Vision called real Vision crypto um and that is a inexpensive um new service that helps you navigate crypto markets will’ll give you a suggested portfolio to follow along how to manage risks um people like uh Jamie Coots does incredible kind of macro crypto onchain research we’ve got technical analysis research o Amando from R guy uh a weekly show navigating that Nexus of macro and crypto um plenty for DG plenty of people who want to look at memes nfts it’s all there it’s very inexpensive and it’ll really help you not this up so don’t this up join real Vision cryptv vision.com crypto the links below see you around next time we hope you enjoyed the video at real Vision we help you understand the complex world of Finance business and the global economy with in-depth analysis from real experts Join the Revolution at realvision

Raoul: “This is the fourth 20% correction in BTC in the last 12 months. Pretty ordinary stuff…”

Join Real Vision co-founder and CEO Raoul Pal for an important market update on what’s happening in crypto markets. Is there more pain to come in this selloff? As Raoul puts it, “Stay calm, stick to the plan, and don’t f*ck this up.”

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In this urgent market update, Raoul Pal discusses the recent 20% correction in bitcoin and gives advice on how to stay calm and stick to your investment plan during market volatility. If you’re feeling panicked, watch this video for reassurance and guidance.

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