Macro strategist Raoul Pal says the Bitcoin (CRYPTO: BTC) pullback reflects rational capital rotation, not abandonment.
Why Retail Rotated Out Of Crypto
Speaking with Milk Road host LG Doucet, Pal argued that retail investors haven’t turned against crypto permanently. Instead, they’ve temporarily moved capital elsewhere.
Pal described much of crypto retail as the “Robinhood crowd,” younger, risk-tolerant investors comfortable with volatility and speculation.
Most of the retail participants are highly opportunistic and they rotate toward whatever is outperforming. The recent crypto drawdown pushed some toward gold and silver, according to Pal.
He noted that since 2020, Bitcoin has outperformed gold by roughly 87%, reinforcing his view that crypto acts like a capital “black hole” during expansion phases.
On a lighter note, Pal said some retail traders have simply shifted to traditional casinos for speculation. But once crypto resumes strong outperformance, he expects them to return.
He concluded that this isn’t disloyalty, it’s rational capital allocation.
Where Bitcoin Is Headed Next
In a separate conversation on Milk Road, Pal reiterated his long-standing thesis that global liquidity drives roughly 90% of Bitcoin’s price movements.
When liquidity expands, crypto rallies.
When liquidity tightens, crypto struggles, regardless of narratives.
Pal argues the current environment resembles a delayed cycle continuation rather than a full cycle termination.
He points to a weakening U.S. dollar, stabilizing or declining bond yields and loosening financial conditions.
Pal added that gold is already responding to looser financial conditions.
Historically, he says, gold tends to move first in liquidity cycles, while crypto lags, but eventually accelerates more aggressively once liquidity expansion becomes clear.
Image: Shutterstock
Recent Comments