Cryptocurrencies have probably already bottomed out and will have the biggest macroeconomic influence on the global money supply – said in recent comments the CEO of Real Vision, Raoul Pal.
In fact, Pal went on to make the bold prediction that economic growth would collapse, leading to a forced increase in the money supply.
He explains how the rise of cryptocurrencies will begin
The former Goldman Sachs executive compared the ISM Manufacturing Index and the US M2 Money Supply from year to year:
“The ISM is inverted and the money supply looks like it should start going higher. If it goes higher, cryptocurrencies will follow. This makes sense because as economic weakness comes, central banks come into play and liquidity starts to enter the system.
We’re already seeing this in China, this is probably accelerating the growth of the money supply. But I think we’re going to see it globally.
The state of the US dollar, it’s helping the money supply. So I think we’ll see a shift in the money supply. So, this is the macro for cryptocurrencies to improve as growth slows down.
That’s kind of inconceivable, because you believe that if growth is slow, then cryptocurrencies will be on a downward trajectory. But it is the opposite. As growth slows, bond yields fall, inflation falls, inflation falls, the money supply starts to increase and cryptocurrencies start to do well.”
The M2 and ISM Manufacturing Indexes
M2 is a measure of the current money supply that takes into account cash, cheque/savings deposits, money market instruments and other easily convertible assets. The ISM Manufacturing Index is considered an indicator of the health of the US economy.
