Raoul Pal, CEO of Real Vision and former executive at Goldman Sachs, asserts that despite recent price weakness, the crypto market cycle is far from over. Pal characterizes the market’s current state as mid-cycle, dismissing the notion that the cycle has reached its peak. He indicates that the key factor behind the latest downturn has been the contraction in excess liquidity across global markets.
Liquidity flows back into focus
Pal has observed that during periods of shrinking liquidity, capital tends to shift into sectors linked to artificial intelligence. In environments where additional market liquidity is scarce, he argues, investors chase faster-growing opportunities in emerging sectors.
According to Raoul Pal, when excess liquidity dries up, capital naturally gravitates toward areas with the highest perceived growth potential. Lately, this flow has been most visible in the AI sector.
However, Pal now sees signs that excess liquidity—both in the M2 money supply and broader monetary indicators—is returning to positive territory. He contends that this shift could reignite inflows into digital assets, bolstering crypto market momentum. Real Vision, Pal’s research platform, is known for its macroeconomic analysis focused on global asset markets.
Pal emphasizes the resurgence of liquidity and argues that this provides a more supportive environment for investment.
The experienced investor describes the current landscape as the midpoint of the cycle rather than a market climax. To substantiate his view, he points to Bitcoin’s long-term logarithmic regression channel, concluding that the flagship cryptocurrency is trading about 1.5 standard deviations below fair value—a territory that has historically signaled oversold conditions.
Technical signals in Bitcoin, Ethereum, and SUI
Pal notes that similar valuation ranges have previously marked prime accumulation phases in past market cycles, specifically during the years 2015, 2018, and 2022. Those periods were followed by notable recoveries, though such technical formations do not provide precise timing for a reversal. As of June 26, Bitcoin was trading near $59,500.
On the Ethereum front, Pal highlights monthly DeMark indicators suggesting a possible reversal setup. He also points out that SUI is trading around 1.8 standard deviations below its trend channel, indicating significant undervaluation.
Mini glossary: DeMark indicators are technical analysis tools used to identify trend exhaustion and potential turning points in markets. A regression channel measures how far the price has deviated from its long-term trend line.
Pal believes that, when considering adjusted metrics, the risk-reward balance in crypto assets looks markedly favorable.
Comparing this scenario to semiconductor stocks, Pal says the semiconductor sector appears overbought, currently positioned about 3.8 standard deviations above trend, while digital assets remain at much lower valuations.
Focusing on layer one networks
Pal continues to favor cryptocurrencies like Ethereum, Solana, and SUI, viewing them as vital coordination layers for the digital economy. He suggests that future artificial intelligence systems will increasingly rely on blockchain infrastructure. As a result, Pal has reduced his portfolio’s exposure to high-growth tech and semiconductor stocks, reallocating toward undervalued layer one assets that he believes are set for significant growth.
The dollar and interest rates could be decisive
According to Pal, global liquidity trends remain the single most influential force behind crypto price movements. He observes that the correlation between Bitcoin and global liquidity has stayed strong, ranging from 85 to 87 percent, with liquidity showing an uptrend since 2022.
Still, Pal warns that a strong US dollar could curb liquidity expansion. However, should interest rates fall, the dollar could weaken, potentially increasing available capital in markets and boosting demand for crypto assets. Looking ahead, Pal anticipates that a shift in market dynamics could see new sectors rising to prominence—even as today’s high-flying areas lose momentum.
