‘Not Selling Anything’: Economist Raoul Pal Shares Drop of Optimism

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As a seasoned researcher and economist with extensive experience in the cryptocurrency market, I find myself deeply intrigued by Raoul Pal’s insights during these tumultuous times. His analogy of the current market collapse as a “violent shakeout” resonates profoundly with my own observations over the years.

Experienced cryptocurrency advocate and economist, Raoul Pal, expresses his individual views and advice to fellow crypto traders and investors experiencing a drop in prices. Acknowledging the high level of apprehension, he encourages everyone to remain patient and hold onto their investments.

“Violent shakeout in max fear zone”: Raoul Pal on crypto collapse

Today’s cryptocurrency downturn can be seen as a “forceful readjustment” or “rebalancing” of risk exposure and leverage, according to economist Raoul Pal in his recent post. Despite this, he remains optimistic about significant growth potential during the 2024-2025 period. However, he cautions that both political and liquidity responses may not happen immediately.

As a crypto investor, I’m excited about this solution addressing the challenge of global central banks needing to refinance their debts at elevated rates. I believe that over time, these rates could potentially drop to around 2.5%. However, it’s important to note that in order to monetize the previous cycle’s interest, they’ll likely require substantial liquidity.

— Raoul Pal (@RaoulGMI) August 5, 2024

Admittedly, the markets have reached a point of extreme fear, as evidenced by the significant drop in the Crypto Fear and Greed Index. In a span of one week, the index fell from 74/100 to its current reading of 26/100, indicating that we are now at the upper end of the “Fear” zone.

During times like these, it’s crucial to hang tight and take a broader perspective. In many aspects, the events unfolding today are part of the normal cycle in bullish periods of the cryptocurrency market, according to the economist.

As a researcher, I urge you all to prioritize safety in your endeavors. Patience often yields valuable rewards, especially when navigating the complexities of market dynamics. It’s crucial to remember that markets are seldom straightforward, and even during periods of prosperity like a bull market, they may attempt to unsettle us.

At the end of the day, this dump being nothing but “nasty flush out” looks probabilistic to Pal. 

As a seasoned crypto trader with years of experience under my belt, I’ve seen my fair share of market volatility. Today, waking up to see Bitcoin (BTC) plummeting below $49,500, a level not seen since mid-February, was a stark reminder of the rollercoaster ride that is cryptocurrency trading. The staggering $1.22 billion in liquidations, equivalent to a significant portion of my portfolio, highlights the need for constant vigilance and adaptability in this market. While I remain optimistic about Bitcoin’s long-term potential, today serves as a humbling reminder that even the most stable digital assets can experience sudden drops. As always, I will continue to monitor the market closely and adjust my strategy accordingly.

No leverage, no FOMO, no noise

In summary, Pal offered some tips for navigating such occurrences with the least possible harm. His advice starts by urging individuals not to succumb to the fear of missing out (FOMO). Additionally, he suggests being cautious when dealing with leveraged positions in future transactions.

Rather than diversifying across numerous assets, a prudent trader might concentrate on a portfolio of no more than 3-5 investments. On the other hand, a riskier trading style, often referred to as “degen,” could involve limiting high-risk allocation to only 10% of the total portfolio.

In light of escalating potential threats, Pal advises adopting self-managed or multi-signature digital wallets for all crypto transactions instead.

Rather than attempting to outwit the market by buying when it’s falling sharply (often referred to as “catching knives”), the economist advises adopting a HODL strategy, which means holding onto your investments for the long term without selling. In fact, he has decided not to sell any of his holdings and suggests that buying more during market dips could be a wise move.

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2024-08-05 19:18