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Real Vision CEO and macro expert Raoul Pal says that Bitcoin price development is not only affected by its built-in halving cycle and that macro-economic factors have an important role to play.
Educating his 976,000 Twitter followers, the former Goldman Sachs executive said:
“Ok, two more charts and some thoughts…this time on crypto…. Is the accepted narrative of the BTC Halving cycle what drives the BTC cycle (and all crypto) or is it the macro? I’m starting to think it’s all about the macro This is global M2 YoY vs Crypto market cap.”
Pal continued by noting that the value of a currency and the ease of which cash can be converted into assets like Bitcoin seem to have the upper hand over the supply side:
“That suggests that liquidity and currency debasement are the predominant drivers, as opposed to supply. I have always erred on the side of demand being more important than supply in market prices of all goods. It is the demand ebb that causes the outflow and the denominator.”
Alongside the adoption curve, this has the result of deeper lows, he explained:
“Those macro cycles occur within the exponential secular crypto up trend and drive the market from overbought to oversold and back again to overbought, while the slope of adoption still persists…leading to higher lows every cycle…”
Nevertheless, Pal does not exclude the supply side from having its effect:
“Yes, reduced supply and more demand equals fireworks”