Bitcoin’s explosive push to a brand new intraday peak above $111,800 on Might 22 set the backdrop for Raoul Pal’s spirited, two-hour “Drinks With Raoul” livestream. The previous hedge-fund macro strategist and Actual Imaginative and prescient co-founder insists the rally remains to be in its early innings. “The Banana Zone has began. Sure, Bitcoin hit an all-time excessive. Subsequent up, it’s alts… Ensure you’re stacked up in your Bitcoin.”
He defines the “Banana Zone” because the section when liquidity forces buyers out the danger curve. That liquidity, he argued, is coming not from inflation however from looming coverage interventions within the bond market.
Why This Bitcoin Cycle Is Totally different
With the US 10-year yield again above 4.4 %, Pal stated the transfer displays collateral shortage, not overheating costs:“Bond yields are going up. Usually that’s not a very good factor… However inflation is falling on a regular basis. The story is liquidity. There’s an absence of liquidity within the bond market, and when yields get too excessive the federal government’s response perform is at all times and in each case to print extra money.”
He predicted the Federal Reserve will both chill out the supplementary leverage ratio (SLR) to let major sellers take up Treasuries or “gown up” a type of yield-curve management: “By July they’ll be utilizing the SLR to permit banks to carry extra bonds. That’s code for, ‘Hey, stick bonds in your steadiness sheet, give some leverage out into the world, and—hey presto—new patrons of bonds.’ If that’s not sufficient, they’ll slap a four-letter acronym on yield-curve management and faux it’s one thing new.”
Such measures, he stated, “take away the left-tail threat” and turbo-charge scarce belongings. “It’s precisely what occurred in 2017. Shares, gold, and particularly Bitcoin went to the moon.”
Pal devoted a number of minutes to a comparative greenback chart: “Trump’s first [term] noticed the greenback fall laborious. Guess what? It’s replaying sooner now… A weak greenback is the important thing to creating the world go spherical. The 12-month achieve in Bitcoin after massive greenback drops has been 119%, 175%, even 592%. That’s the denominator impact.”
He rejected tariff-war fears as noise: “It’s simply negotiation. They’ll agree one thing wise as a result of the US is within the enterprise of promoting bonds, not blowing up commerce.”
Whereas celebrating Bitcoin’s milestone, Pal argued that Ethereum and high-beta Layer-1s stand to outperform as soon as the ISM manufacturing index—presently languishing under 50—turns up: “The financial-conditions index I monitor is screaming greater and leads ISM by 9 months. When ISM crosses 50 on the upside, that’s if you get alt-season. The ETH-BTC ratio is basing; Bitcoin dominance has peaked.”
Solana, SUI, Dogecoin And $140,000 Per BTC
He pointed to Solana and Sui charts “forming basic cup-and-handles,” then provided a tongue-in-cheek tackle Dogecoin: “The funniest end result is Doge ultimately outperforming Bitcoin from inception and turning into the toughest forex on the planet. That may upset lots of people—however the chart says it’s doable.”
Regardless of the exuberance, Pal inserted a timing caveat linked to his global-M2 mannequin: “Liquidity says we ought to be over $140,000 by July. However July–August could possibly be a sideways ‘correction section 2’ because the greenback reflex-rallies. That’s the spot to take way of life chips off the desk—in order for you. Nothing in regards to the broader cycle adjustments.”
He reiterated that the total Banana Zone stretches into 2026, barring an unexpected coverage shock: “Each cycle individuals scream ‘diminishing returns.’ Each cycle they’re unsuitable.”
Pal’s thesis boils down to a few interlocking forces: policy-driven liquidity, a structurally weaker greenback, and bond-market triage that funnels capital into scarce belongings. Whether or not merchants settle for the “Banana Zone” branding or not, markets seem aligned. “I’ve been telling the identical story for the reason that 2022 low—and by chance it’s been proper,” Pal concluded. “You possibly can ignore the wine suggestions, however don’t ignore the liquidity charts.”
For buyers, the message is obvious: if the bond market forces the Fed’s hand, the trail of least resistance for Bitcoin—and shortly, maybe, for Ether and its brethren—stays upward.
At press time, BTC traded at $110,642.
Featured picture created with DALL.E, chart from TradingView.com
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