Raoul Pal Says Inflation Is Hurting Retail Investments in Crypto
Crypto entrepreneur, CEO of Real Vision and macro guru Raoul Pal reached out to his followers on Twitter just before the New Year and shared some of his insights on why he believes Bitcoin and other cryptocurrencies have not boomed as much as people had hoped for.
Noting that retail activity in the year has drastically decreased in the second half of the year, Pal points out the underlying factor which is that the spending power of the general population went down dramatically. In other words, people just did not have enough extra money to save up, due to increasing prices.
In a thread that starts with Pal saying “There is a lot going on in the digital asset space but also nothing going on and that is the problem…”, he goes:
My view is that the key reason the market has seen less retail activity is that wages are rising slower than CPI. The cost of living has gone up dramatically and that has removed the marginal investor from crypto. They just can’t afford the disposable income.
— Raoul Pal (@RaoulGMI) December 28, 2021
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While inflation is generally cited as “good for crypto,” being an effective hedge, this is largely valid for large investors and institutions who need to allocate and secure their wealth.
Pal adds that from what it looks like, inflation is not going anywhere, and the crypto markets will likely not see any drastic increases in retail investors.
“I don’t see stable economic growth and lower inflation for a while so we are going to have to rely on institutions and hedge funds to allocate meaningful capital. I think that is coming and Q1 should confirm that, indeed maybe January, but we have to wait and see…”
The Real Vision CEO continues and shares his optimism while advising people to remain patient:
“New capital will flow in over time and a broader rally, when it arrives, will bring retail investors and a reflexive loop of institutional investors FOMO’ing in. That day will come. You just have to not overextend yourself, don’t use leverage and sit tight. Play the long game.”
Just prior to his Tweets, Pal said in an interview with the Stakeborg Talks on December 27 that he expects institutions and large investors to start allocating large amounts in crypto starting January, after having taken profits in December for the sake of corporate bookkeeping.
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Source: igaming
