The Liquidity Wave is Coming: Why Tech Stocks and Crypto Are Poised to Rally

Raoul Pal says central bank money printing will boost risk assets, despite economic uncertainty.

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Economist and founder of Real Vision, Raoul Pal, expressed the view that tech stocks and cryptocurrencies are going to record a price rally in the near future.

In a new ask-me-anything (AMA) session, Raoul Pal pointed out that all signals strongly suggest that central banks, around the world, will inevitably be forced to print money, which if it happens will boost risk assets, especially cryptocurrencies and the tech sector.

“All forward-looking indicators suggest that liquidity will continue to increase and that will drive cryptocurrencies and tech stocks higher more than anything else. And that’s basically the story of the year so far. I think this is continuing and it’s confused a lot of people.

But, one trade that has confused me is the bond trade and that confuses a lot of people. Bond yields should have come down by now and they still haven’t. But I think that has to do with the debt ceiling issue, which is the other confusing issue.

The debt ceiling issue has some real risks around it and we don’t know how to price them. All we know is that people are pretty pessimistic about this issue and I think it’s also reasonable to have hedges around it because we don’t know what might happen.

But the odds are that anything that causes paralysis in the financial markets will lead toโ€ฆ issuing money.”

A new wave of liquidity is coming

Pal pointed out that indicators linked to the balance sheets of G5 central banks suggest that a new wave of liquidity is approaching financial markets.

Moreover, he noted that analysts who are pessimistic about risk assets because of uncertain economic conditions have lost their sense of purpose because even if the economy slows even further, central banks will still be likely to expand the money supply.

“Yes, we may have some hurdles, but liquidity is coming, as the economy slows and central banks start to increase their activity, that will drive asset prices higher.”

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