🍌 Bitcoin Enters the Banana Zone — Is This the Bull Run of a Lifetime?
The lively webcast by Raoul Pal, “Drinks With Raoul”, lasted two hours and took place amidst Bitcoin's meteoric rise to $111,800 on May 22. The former hedge fund macro strategist and co-founder of Real Vision says the surge is young. “The Banana Zone has begun. Bitcoin has reached all-time highs. The next topic is alternatives. Make sure you have enough Bitcoin.”
The “Banana Zone” occurs when liquidity pushes investors out of the risk curve. He said that the market bond policy measures are causing such liquidity, not inflation.
Pal said that collateral scarcity, not price increases, caused the U.S. 10-year yield to rise above 4.4 percent. It’s usually not a good sign... Inflation is always falling. The problem is liquidity. Bond market liquidity is low, therefore, when rates get too high, the government always prints more money.
He said that such actions “remove left tail risk” and increase limited assets. “Exactly what happened in 2017. Bitcoin, gold, and stocks shot to the moon.”
Pal spent several minutes comparing dollar charts: “Trump's first [term] saw the dollar drop drastically. Guess what? The repetition is now faster. A weak dollar drives the world. Bitcoin gained 119%, 175%, and 592% in 12 months after major dollar drops. The denominator effect.”
While Bitcoin celebrated its milestone, Pal said that Ethereum and high beta Layer-1s would gain when the ISM manufacturing index—currently below 50—rises: “The financial conditions index I follow is screaming higher and leads the ISM by nine months. The altcoin season begins when the ISM rises above 50. Bitcoin's supremacy has peaked (the ETH-BTC ratio is stabilizing).
With Solana and Sui charts “forming classic cup and handle patterns,” he joked about Dogecoin: “The funniest outcome is that Doge eventually surpasses Bitcoin from its inception and becomes the strongest currency in the world. That will anger many, but the chart suggests it’s possible.”
Pal's global-M2 model warned: "Liquidity says we should be above $140,000 by July," despite the optimism.
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