Goldman Sachs says Bitcoin and Ethereum bottomed out and it’s time to buy

by James · December 13, 2022

According to a former Goldman Sachs executive, the price actions of the two leading digital assets are trending against historical signals.
Pal states that the crypto market is about to enter a phase of boredom, which usually indicates the start of a new bullish run.

Macroeconomics expert and a former Goldman Sachs executive, Raoul Pal, explained that the price action of BTC and ETH is about to make history. He explained that both digital assets are at crucial support levels. Pal told his 991,000 followers on Twitter that BTC has reached the top of its oversold region.

Thus, long-term investors have a good chance to buy the dip now. “Based on the long-term trend of Metcalfe’s law adoption curve at two standard deviations, BTC’s cyclical low is in its most oversold territory ever.” According to Metcalfe’s law, a network’s value is directly proportional to the number of users.

Pal explained that this adoption rate for Ethereum has reached a critical support level. He added that ETH’s current price is on the long-term log uptrend of the Metcalfe adoption curve. Pal, also co-founder of Real Vision Group, stated that the amount of dollars in supply circulation or USD liquidity largely determines the prices of crypto assets.

He added that it is no wonder that the ongoing crypto winter and the sharp decline in global liquidity are happening at the same time. However, Pal believes this trend will reverse soon as central banks no longer have a choice but to change their hard stance towards aggressive rate hikes. “Global liquidity is about to experience a massive change based on the effects of the recession and a change in policy by central banks.”

The start of a boredom phase and a bullish run

Pal argues that the crypto market is about to enter a phase of boredom, which usually indicates the start of a new bullish run. However, he cautioned investors not to expect this phase to be accurate. What is important instead is the context behind this phase. The former Goldman Sachs chief further explained that crypto cycles involve an increase in positions after the end of a long-term uptrend.

In this phase, investors’ fear and loathing are at their peak. However, a boredom phase follows this fear and loathing phase. Pal also said that the boredom phase is a period of coming to terms with the market’s good and bad news. We then extract important lessons from these events. He added that there is zero leverage during this period and everyone can start over.

Pal further said that he has noticed that previous episodes of low 30-day realized volatility often coincide with crypto market lows. According to him, this magic level for BTC is currently at 20 percent. Whenever BTC reaches this level, it usually precedes a more significant leg higher in an early bull market. He added that ETH currently has a similar structure. However, ETH’s crucial 30-day level is at 40 percent compared to BTC, which is at 20 percent.