‘Pure Chartists Think It’s Over, I Don’t’ – Influential Macro Strategist Pushes Back On Bear Market Narrative

• According to influential macro analyst Raoul Pal, crypto pessimism might be misguided.
• He pointed out that there has historically been a 90% correlation between global liquidity and Bitcoin and a 97% correlation with the NASDAQ Composite.
• Pal stated that improving financial conditions and declining U.S. Treasury cash balances are increasing global liquidity.

Macro investor Raoul Pal has suggested that the current negative sentiment around cryptocurrency markets may be misplaced. 

Pal wrote on X that even though markets seem ‘despondent’ and ‘the pure chartists are telling you it's all over,’ he doesn't agree. He says that liquidity, or the amount of money that moves through financial systems, is still the main factor that affects asset prices. 

Pal, co-Founder and CEO of Real Vision, said that global liquidity has historically been 90% correlated with Bitcoin and 97% correlated with the NASDAQ Composite over a 12-month period. This means that rising liquidity could keep supporting the risk asset markets.

Bitcoin (BTC) was trading at $67,389.05, down 0.9% in the last 24 hours. On Stocktwits, retail sentiment around BTC remained in 'bullish' territory, while chatter levels remained in the 'low' over the past day. 

Factors Driving Macro Liquidity

Pal pointed out several factors he thinks are driving global liquidity growth.

He said that the Global Macro Investor (GMI) financial conditions index has declined significantly over the last six months, indicating that financial conditions are improving. 

Businesses and investors can often get money more easily when they are less financially stressed. This can help the economy and asset prices.

He also talked about how the U.S. economy was getting better. Pal said that a previous drop was caused by a decrease in U.S. Treasury cash balances. He thinks the Treasury's cash balances have changed, accelerating liquidity growth. 

As of March 5, the U.S. Treasury's Treasury General Account (TGA) is at about $840.85 billion, slightly below $846.98 billion. The small drop means that the government is flushing out of the system, which puts cash back into the markets.

Pal has said that liquidity flows are a major factor in risk assets, noting that crypto markets have historically performed well when system liquidity rises. Pal also spoke about how China's growing balance sheet is adding liquidity.

Are Markets Waiting For The CLARITY Act To Pass?

Pal also pointed to how digital assets might be more clearly regulated in the US if the CLARITY Act is passed, which he thinks could bring more banks and asset managers on board.

Pal stated that the market sentiment remains negative despite those encouraging elements.

He claimed that the market is "the most oversold in history" according to several technical metrics and that the industry is "still in fear." Pal added that a rare buy signal, which traders frequently interpret as an indication that selling pressure may be close to exhaustion, was recently triggered by the Bitcoin weekly DeMark indicators.

To end, Pal stated that oil prices may remain a significant factor in determining market conditions in the near future.

Read also: Weak Jobs Data Isn’t A Red Flag, Says Apollo Economist Betting On AI And Defense Boom

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