On Friday (May 8), former macro hedge fund manager Raoul Pal, explained how technical analysis of Bitcoin’s recent price action tells him that the current bull run could “potentially” take the Bitcoin price all the way to one million dollars.
Prior to founding macro economic and investment strategy research service Global Macro Investor (GMI) in 2005, Pal co-managed the GLG Global Macro Fund in London for global asset management firm GLG Partners (which is now called “Man GLG”). Before that, Pal worked at Goldman Sachs, where he co-managed the European hedge fund sales business in Equities and Equity Derivatives.
Also, currently, Pal is the CEO of finance and business video channel Real Vision, which he co-founded in 2014.
Around 00:40 BST on May 8 (or 23:40 UTC on May 7), according to data from CryptoCompare, the price of Bitcoin went above the $10,000 level for the first time since February 18:
Bitcoin’s current bull run seems to be powered partly by macro-economic factors, partly by speculation due to the upcoming Bitcoin halving on May 12 , and partly by the very bullish comments about Bitcoin (as an inflation hedge) in the investment letter (“Market Outlook — Macro Perspective”) sent out by Paul Tudor Jones II to clients of the $22 billion “Tudor BVI Global Portfolio”, which is managed by his asset management firm Tudor Investment Corporation.
Well, less than two hours after the Bitcoin price surged above the $10K level, Pal took to Twitter to talk about “Bitcoin porn” (from a technical analysis point of view). More specifically, he wanted to explain how the charts are telling him that the current bull run could “potentially” take the price of Bitcoin all the way to $1 million:
Bitcoin Porn and The Perfect Set Up… $BTC #BITCOIN
Chart 1 – The Perfect Wedge.
If you use classic charting techniques, it gives you a price target of around $40,000…but 1/2 pic.twitter.com/Q2pYRJtnIP
— Raoul Pal (@RaoulGMI) May 8, 2020
Chart 2 – The Perfect Wedge on a Log Chart
Well, that gives you a price object for this run potentially (key word – potentially) of $1m. pic.twitter.com/ZDJXsrbbVN
— Raoul Pal (@RaoulGMI) May 8, 2020
Chart 3 – The Perfect Regression Channel
That gives a 1 standard deviation move to $400,000 and a 2 standard potential to $1m (potential). pic.twitter.com/YV1SUOKWjn
— Raoul Pal (@RaoulGMI) May 8, 2020
Pal then reiterated his belief that the “crazy” amount of quantitative easing (read money printing) being done by the world’s major central banks has to be good for Bitcoin, which in contrast is set to undergo “quantitative tightening” in just four days:
Add to that the ENTIRE worlds central banks are either seeing their currencies collapse to the almighty dollar (BRL, TRY, ARG, etc) or they are printing money like CRAZY.
HUGE quantitative easing fiat meets the hardest money that automatically quantitatively tightens. $BTC wins.
— Raoul Pal (@RaoulGMI) May 8, 2020
He summarized why he feels so bullish about Bitcoin with the following tweet:
This is the one of the best set ups in any asset class I've ever witnessed…technical, fundamental, flow of funds and plumbing. All. Now.
Again, to be clear, even if it has 90% odds, doesn't mean its definitely going to work…I can and will be wrong…often and dramatically.
— Raoul Pal (@RaoulGMI) May 8, 2020
It is worth remembering that in the April 2020 issue of the GMI newsletter, Pal explained why he believes that Bitcoin, which he calls “the future”, could have a $10 trillion valuation in the future.
In this report, Pal talks about the economic risks posed by the COVID-19 pandemic — which he calls “the biggest event of all of our lifetimes” — and what individual and corporations can do to protect themeselves.
Pal believes that his predictions for the future will take place in three stages:
- the liquidity phase (i.e. “the panic”)
- the correction phase (i.e. “the hope”)
- the “brutal phase that changes everything” (i.e. “the insolvency”)
In this report, Pal said that believes that the price of Bitcoin could reach $1 million within the next 3-5 years and that Bitcoin could be a “$10tn asset class.”
Here is Pal explaining why the idea of a $10 trillion valuation for Bitcoin is not so crazy:
“After all, it isn’t just a currency or even a store of value. It is an entire trusted, verified, secure financial and accounting system of digital value that can never be created outside of the cryptographic algorithm.
“It is nothing short of the future of our entire medium of exchange system, and of money itself and the platform on which it operates.”