Former Goldman Sachs executive Raoul Pal believes the bottom has been reached for Bitcoin (BTC), Ethereum (ETH) and the broader crypto markets.
The CEO of Real Vision says in a new YouTube video that traders and investors should look 12-18 months ahead as asset markets tend to price the future.
“Right now we can hear people saying on Twitter, ‘We’re going into a recession. Clearly there’s going to be another drop in stocks because they have to factor in the recession. That’s assuming everything works out in real time. But this is not the case.
So when I look at the NASDAQ year-over-year rates of change and compare it to the ISM index, which is my guide to the business cycle… This suggests that the NASDAQ values the ISM at around 40 ISM 40 is in a relatively deep recession. The ISM at 47 is generally a recessionary level. And 40 is something in the order of magnitude of negative GDP growth of 2%. So it’s already included in the price.
The ISM manufacturing index is considered an indicator of the health of the US economy. It currently stands at 52.8 as of September 1, according to invest.com.
Pal also thinks inflation is likely to turn negative over the next 18 months, which he says is good news for risky assets like crypto.
“If we look at 12 months, the recession is behind us, rates are lower and inflation is low. So this is a very good result for risk assets and crypto. The crypto bottomed out in June. We had the retest. Bitcoin had a retest just two days ago, and I think that was the retest.
My DeMark indicators, which I mainly use for my technical analysis, gave me this signal. ETH had a much stronger signal in June.
I think the markets are looking to the future. I think the sentiment is extremely bearish, and we are heading for a potential shift in the macro.
Traders use the DeMark indicator to spot possible trend reversals.
Bitcoin is trading at $22,191 at the time of writing. Ethereum is trading at $1,692.
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