Bitcoin just blasted through the $111,800 ceiling on May 22, setting a fresh ATH.
But now Raoul Pal, that ex-Goldman Sachs big shot and Real Vision co-founder, says this rocket’s only in its early boost phase.
He calls it the Banana Zone, a crazy market phase where liquidity pushes investors to chase bigger risks. I like the idea!
It’s the liquidity?
Now, what’s cooking behind this Banana Zone? Pal points to a bond market drama, not inflation, as the real liquidity driver.
With the US 10-year treasury yield climbing above 4.4%, it’s not about prices overheating. Nope, it’s about collateral scarcity.
When bond yields spike too high, the government’s usual move? Printing more money.
Pal expects the Fed to loosen rules so banks can buying up more bonds, or even roll out some fancy yield-curve control gimmicks by July. Translation? More liquidity flooding the system, and that’s fuel for Bitcoin’s blastoff.
Remember 2017? Stocks, gold, and Bitcoin all shot to the Moon. Pal says we’re on a déjà vu trip, thanks to these policy moves that kill left-tail risk and supercharge scarce assets.
Plus, the dollar’s weakening fast, just like during Trump’s first term, which historically sends Bitcoin skyrocketing.
Past dollar drops have sparked Bitcoin rallies of 119%, 175%, even 592%. That’s some serious denominator effect magic right there.
Dogecoin?
But Pal also warns of a sideways, the correction phase 2 around July-August when the dollar might bounce back briefly.
That’s your cue to maybe pocket some gains if you’re feeling cautious. Still, the big picture? The Banana Zone’s got legs well into 2026, unless some unwelcomed policy curveball hits us.
And what about altcoins? Pal’s got his eyes on Ethereum and high-beta Layer-1s like Solana and Sui, which are shaping up with classic bullish patterns.
He even cracks a grin about Dogecoin possibly outperforming Bitcoin someday, yeah, the memecoin might just become the hardest currency on the block, upsetting a few people along the way.
Cry wolf?
So, experts think if the bond market forces the Fed’s hand, Bitcoin’s path is mostly uphill, with altcoins ready to join the party soon.
Raoul’s been preaching this liquidity story since 2022, and it’s been hitting the mark. Ignore the wine recommendations, but don’t you dare ignore those liquidity charts.
Disclosure:This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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