Real Vision’s chief executive officer, Raoul Pal, believes that crypto has “likely bottomed” and that the global money supply is the most significant macro effect on crypto.
In a new video, Pal forecasts that economic growth will soon “fall off a cliff,” causing the money supply to expand.
The former CEO of Goldman Sachs provides a graph comparing the ISM Manufacturing Index with the US M2 Money Supply from year to year.
“In this chart, ISM is inverted, and it seems that the money supply should begin to recover and rise. If it increases, crypto should increase as well. This makes sense because when economic weakness occurs, central banks start to intervene and inject money into the system.
Already seen in China, presumably accelerating the money supply increase. However, I believe it will occur universally. Therefore, this gets intriguing.
The current state of the U.S. dollar may result in swap lines, which benefits the money supply. Consequently, I anticipate a change in the money supply. Therefore, the macro for crypto is improving as growth slows. It is contradictory since you may assume that crypto will be negative if growth is sluggish. The reverse is true. As economic growth slows, bond rates fall, inflation decreases, the money supply increases, and crypto begins to do well.
M2 measures the current money supply, including cash, checking/savings deposits, money market securities, and other liquid assets. The ISM Manufacturing Index is a measure of the US economy’s health.