Raoul Pal — renowned investor, co-founder and CEO of Real Vision — suggested that the cryptocurrency market is near its bottom.
In a lengthy Dec. 12 Twitter thread, Pal revealed that he “noticed in the past is episodes of low 30-day realized volatility have coincided with lows in the crypto market.” When it comes to bitcoin (BTC), the magic level is 20%, and every time the coin got there, it was the cyclical low that preceded a larger leg higher in an early bull market, Pal noticed.
As can be observed in the chart below, Bitcoin’s 30-day realized volatility recently dipped under 20% — an event that has not taken place since 2020.
Bitcoin 30-day realized volatility chart | Raoul Pal/Bloomberg Finance
Pal also suggested that a similar pattern can be observed with ethereum (ETH). Dips below 40% often precede the bull market. In October, ETH saw 30-day realized volatility at 20%, he added.
Ethereum 30-day realized volatility chart | Raoul Pal/Bloomberg Finance
Pal further claimed that “this likely cyclical low in BTC is the most oversold in history vs. the long-term trend” based on Metcalfe’s law-based estimation of the value of adoption, currently standing at two standard deviations. Ethereum, on the other hand, is purportedly following its long-term logarithmic uptrend expectations based on Metcalfe’s law.
Pal claimed that this cyclical low is driven by global liquidity that is on the cusp of a significant turn, as recession comes into view and central banks change their policies. He said that crypto cycles are about adding positions at the long-term uptrend when everyone is at max fear and disgust, followed by boredom. He concluded:
“The boredom phase is usually the digestion after all the worst shocking news comes out, and the markets and participants try to repair and take stock. Leverage is totally wiped out, and we can start with a fresh slate… Let’s see how it plays out…”
Raoul Pal, co-founder and CEO of Real Vision
