Listening to the analysis of macro investors, does Bitcoin still have a four-year cycle theory?

22-07-22 13:31

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Original Author: Raoul Pal, Real Vision CEO

Original translation: 0x137, BlockBeats

Raoul Pal is a global macro-finance research institution Global The founder of Macro Investor and Real Vision is also one of the most well-known KOLs in the current encryption field. This article is based on Raoul Pal’s views on his personal social media platform, and BlockBeats’ translation is as follows:

Regarding the cycle of the encryption market, Bitcoin halving is the main driving force recognized by most investors. But I have gradually come to believe that the main driving force behind the crypto market cycle is not the halving, but macro factors.

The following figure is a comparison of the global M2 money supply growth rate and the cryptocurrency market value change . We can see a strong correlation from this.

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This shows that even in the crypto market, liquidity growth and currency debasement are still the main drivers of market prosperity, rather than supply reduction. I have always believed that demand is always more important than supply in the determinants of market prices for all commodities, and that what causes money to flow out and prices to fall is a fall in demand.

These cyclical macro factors are happening right on the exponentially growing crypto bandwagon and driving The market goes from overbought to oversold and back to overbought, and so on. But it is worth noting that the popularity curve of the crypto market still exists, which is why the top and bottom of each cycle are higher than the previous cycle.

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Also we need to note that the global M2 money supply growth in the first graph is turning. While it’s still early days for this turn, the crypto market is inherently forward-looking and turned around earlier than most assets.

So, has the crypto market bottomed out? My view is probably balanced at the moment. But I tend to think that the macro-level turn is very close. Yields in the bond market have also peaked with a high probability.

We can look at the return on investment of various encrypted assets since the Sanjian liquidation event:

BTC +24%

ETH +71%

SOL +64%

AVAX +77%

DOT +26%

AAVE +116%

UNISWAP +131 %

XRP +29%

NFT volume is also steady On the rise, the floor prices of those high-quality blue-chip projects have also stabilized and even started to rise. The bottom of the crypto market is usually not a straight line going all the way up, and in the first few months after the recovery, there is usually a big test of resistance level at a certain point or sideways range.

Taking SOL as an example, currently SOL definitely looks like a head and shoulders bottom structure.

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While SOL/ETH's breakout of the downtrend has been corrected, if SOL breaks out of recent highs, it will most likely do better. Over the past 4 weeks, I have built a nice long SOL position and also bought more ETH. Although SOL has a much smaller market cap than ETH, it still matters in my opinion.