Ex-Goldman Sachs Exec Says Crypto Cycle Remains Mid-Phase

TLDR

• Raoul Pal says the crypto cycle remains mid-phase, not at a peak or end.
• He links recent crypto weakness to negative excess liquidity across global markets.
• Capital rotated into AI sectors as liquidity tightened, according to Pal.
• He states excess liquidity has now turned positive across M2 and broader measures.
• Bitcoin trades near oversold levels on long-term regression models.

Raoul Pal, CEO of Real Vision and former Goldman Sachs executive, said crypto markets face a liquidity-driven downturn. He argued that the crypto cycle remains intact despite recent price weakness. He also stated that improving global liquidity conditions support renewed capital inflows into digital assets.

Liquidity Shift Defines Crypto Cycle Position

Pal said crypto markets declined due to reduced excess liquidity across global markets. He explained that capital moved toward artificial intelligence sectors during that period.

He stated that excess liquidity has now turned positive across M2 and broader monetary measures. Therefore, he expects capital to rotate back into crypto assets.

Pal described the current phase as mid-cycle rather than a cycle peak. He used Bitcoin’s log regression channel to support this position. He said the asset trades near 1.5 standard deviations below fair value, indicating oversold conditions.

He referenced historical patterns where similar levels marked accumulation zones. He noted that past cycles showed recovery after similar technical signals. Therefore, he believes the current positioning reflects early recovery stages.

Bitcoin, Ethereum, and SUI Show Oversold Signals

Pal pointed to Bitcoin trading near the lower bands of its long-term regression model. He said the Rainbow Chart places Bitcoin below its lowest sentiment zone. According to data, Bitcoin traded near $59,500 on June 26.

He explained that prior cycles in 2015, 2018, and 2022 reached similar levels before rebounds. He stated that prices returned to higher bands within 12 to 18 months. However, he noted the model does not predict exact timing.

He also highlighted Ethereum’s monthly DeMark indicators showing a reversal setup. He said SUI trades around 1.8 standard deviations below its trend channel.

Pal contrasted crypto with semiconductor stocks, which he said appear overbought. He estimated the semiconductor trade at around 3.8 standard deviations above trend. Therefore, he views crypto as undervalued relative to those assets.

Layer One Assets Positioned for Rotation

Pal confirmed his continued focus on Ethereum, Solana, and SUI. He stated that these networks serve as coordination layers for digital economies. He added that artificial intelligence systems will rely on blockchain infrastructure.

He said, “AI and crypto are married at the hip,” describing their functional relationship. He explained that AI agents require programmable transaction layers to operate efficiently. Therefore, he sees blockchain as essential to AI development.

Pal compared potential upside between crypto and technology equities. He said NVIDIA may face limited growth from current levels. However, he stated Ethereum and Solana still offer expansion potential.

He also discussed portfolio adjustments based on valuation differences. He said he reduced exposure to high-growth equities and semiconductors. He shifted capital toward undervalued layer one assets.

Global Liquidity and Dollar Trends Remain Key Drivers

Pal identified global liquidity as the main driver of crypto price movements. He said Bitcoin maintains an 85% to 87% correlation with global liquidity trends. He added that liquidity has increased since 2022.

He explained that a strong US dollar currently limits liquidity expansion. He expects interest rates to decline, which could weaken the dollar.

Pal stated that lower rates could increase available capital across markets. He expects this shift to support crypto asset demand. He also said improving liquidity conditions may drive the next phase of the crypto cycle.

He concluded that asset leadership may rotate during the next market phase. He stated that current leaders may lose dominance as conditions change. He said he continues accumulating positions based on long-term frameworks.

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