Real Vision CEO Raoul Pal says a changing macroeconomic backdrop makes him very bullish on risk assets like crypto.
In a new Real Vision Finance video, the former Goldman Sachs executive says that a deceleration of the Federal Reserve’s interest rate hikes could serve as a tailwind for both traditional and crypto markets.
Last year, the Fed’s crusade to combat inflation led to four consecutive 0.75% interest rate increases before the central bank slowed it down to 50 basis points in December.
“I’m actually very bullish. Now the recovery from a bear market either comes [in] two ways: it comes up, corrects and then eventually goes or it comes sharper. It depends on central bank action, liquidity, that kind of stuff.
But if I look forward, I’m very bullish because we’ve just gone through the rate cycle, so that’s out of the way… It’s the rate of change that matters. The rate of change comes down first then sticks. So that’s good for risk assets.”
With inflation starting to ease its grip on the economy, Pal predicts the rate of change will continue to decelerate, which he thinks is bullish for crypto and other markets.
“A lot of the direction is that inflation weight is less and therefore the rate of change of interest rate increases the Fed are making it pretty clear they’re probably going to get a 25 [basis points]. In global macro, it’s the rate of change that matters more than anything else, not the absolutes.
If the rate of change changes, all these beach balls start popping out of the water that have been held down by the heavy weight of interest rate raises and that rate of change. That’s all gone. So suddenly, emerging markets go up, gold goes up, crypto goes up, and equities go up. That whole story.”
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