Are The Stars Finally Aligning? [Crypto Insider Talks - Sep. 2024]

Real Vision’s Raoul Pal and Delphi Digital’s Kevin Kelly are back to discuss the latest trends in macro and crypto.

• Why the Fed just gave the “green light” to global central banks
• Impact of China’s pivot and PBOC stimulus
• Contrasting similarities to 2016-2017 and 2019 cycles
• Why BTC has lagged the stock market and gold’s recent price rally
• Will crypto markets impress or disappoint in Q4?
• Emerging narrative around SUI & whether it’s a contender to outperform
• Has ETH lost its luster with institutions and investors?

This episode was recorded on October 1st, 2024.

Social Links:

• Kevin’s Twitter
• Raoul’s Twitter

TRANSCRIPT

NICO BRUGGE: Welcome to Crypto Insider Talks. I’m Nico Brugge, joined by our guests, Raoul Pal and Kevin Kelly. Raoul, Kevin, everybody said, it’s October. We’re only down on the day, it seems. Unless you’re in some crazy memecoins, what are your thoughts? What’s going on today?

RAOUL PAL: This is why we can’t have nice things. We can’t. Every time we want something, it just doesn’t happen. And I even got the dress code wrong today. You guys are in black. You got hardcore. I’m in white, but it’s because I’ve got a suntan and you both are pasty New Yorkers.

NICO BRUGGE: Well said, it looks like Oreo on the three shot right now.

RAOUL PAL: Yeah, look at the color difference.

NICO BRUGGE: And for what it’s worth, I’m even pastier in person. Mario’s being very kind and giving me a little extra color in the background.

RAOUL PAL: Yeah, blending [?].

KEVIN KELLY: Yeah, Mario, if you could throw some of that shade my way, that’d be great.

RAOUL PAL: It’s impossible to add color to something with a total absence of color, Kevin.

KEVIN KELLY: Honestly, I have one of the better tans I’ve had going this summer too. It just it goes away that quickly, though, if I’m out of the sun for two weeks, so yeah.

NICO BRUGGE: So gentlemen, what’s going on in that we’re only seeing red today. I assume a lot of this has to go on with the geopolitical situations currently unfolding in the Middle East.

RAOUL PAL: Yeah. World War III is never a good look. I could be dead wrong, because geopolitics are a very murky field, but the preannouncements by Iran reminds me of the other preannouncements. I don’t think they really want to go to war with Israel, and so my guess is this is going to be just a little wobble before we continue with October, and it will have just shaken people out of positions. People, October, October, let’s go, let’s go. You saw the bullish post getting to crescendo on Sunday night. So this is why we can’t have nice things. It has to then unwind a bit. Everyone gets stopped out, and then it can finally go.

But I wrote GMI over the weekend, and we did a whole section on the banana zone. It was called the Q4 banana zone layer cake. And we must have gone through 50 charts on why this is very likely to happen. On a probabilistic basis, barring exogenous shocks like World War III, everything is happening. The money printer is going, the charts are looking fantastic. Just everything is in place. So I remain just same view that I’ve had, that we’re now entering– don’t forget, the banana zone, this time is not just Q4 like it was last year, but this is that next 12-month period. This is when things get really, really exciting. So I don’t know. Where are you, Kevin, with all of this?

KEVIN KELLY: Yeah. That seems like the animal spirits are reawakening. There’s a number of things since the last time we chatted that have gone on in the global liquidity front that we can get into, to be quite frank, and not to our own horn too much, but those who’ve been tuning into this for months now, I don’t think any of this comes as a major surprise. The biggest thing that came out of central banks for the last week or so has been this seemingly reversal, or pivot, huge pivot from the PBOC. But as we’ve talked about, the writing has been on the wall for months, given deflation, massive supply, demand.

RAOUL PAL: Yeah, it was the most likely one to go first.

KEVIN KELLY: It was a matter of when and not if. And then, I think the combination of that and then, the Fed essentially giving other central banks it might be the green light by starting to officially with the rate cutting easing cycle. Now, it depends on how much or how fast they wind up cutting rates, and there’s a lot of debate around that. The point being, I think, signal wise, they’ve basically pivoted away from tighter policy towards officially more easing, which, as we talked about last time, everybody has wanted a weaker dollar, has wanted lower rates. It’s opened the door, I think, for the PBOC to stimulate and provide the stimulus that they need for the reasons we’ve been talking about why we mentioned.

There’s a good argument that that PBOC pivot wasn’t priced in the markets either. Because everyone was bearish underweight heading into, really, last week. And you see that in the reaction of Chinese stocks, which are up something 20% over the last five, six days alone. I still believe more stimulus is coming, because it certainly isn’t enough to pull China out of the rut that it’s in. So on the liquidity front, things have really started to turn higher. And then when you point when you look at the crypto market, we’ve started to see indications of risk appetite starting to make its way back.

It’s still a little bit early in terms of saying this is the breakouts that you’re looking for. But when you look at across different sectors, when you look at the breadth of tokens that are performing well or outperforming, that’s pretty, pretty broad based at this point. There’s certain sectors that are performing better than others, obviously, as always, but the fact you’re seeing a lot of green on the screen, and not just pockets of green, I think is a healthy sign. I think what’s interesting is when you actually boil down and look at for example, the top 10 most traded crypto assets of this week, excluding Bitcoin, six of those are memecoins, and then the other three are really just majors around ETH, SOL and Sui.

So what is the market telling you? The market’s telling you that, again, as we’ve talked about, memecoins are that almost attention liquidity bet. When you have a risk on market, those should outperform, as we are seeing right now. And two, SOL and now Sui entering in the mix. And I’m sure you’ve got thoughts on this that we can get into telling you that that’s where the market’s focused. I think, it’s again starting to give some green shoots of what could continue to outperform and do well if we continue to see this Q4 seasonality in this banana zone start to really take form, SOL and Sui are still, I think, very much at the forefront of what could and should outperform.

RAOUL PAL: So going back on to a couple of these points, 2016-2017 was one of the great crypto cycles. It started relatively slow, and 2017 was a lala-year. Most people weren’t involved in it then. But I sold out my Bitcoin in March, April 2017 at two and a half grand, or two grand, or whatever it was, it went up to 20 by the end of the year. That’s Bitcoin. It’s not a meme, that’s Bitcoin in the middle of ICO season and Ethereum bull run. It was crazy.

Now, what was 2016 about the Fed were actually on hold and liquidity didn’t increase. What was it? PBOC. The PBOC, the last time they did