Now, renowned former Goldman Sachs fund manager Raoul Pal has warned the coronavirus crisis will cause history’s worst insolvency event, while moving 25% of his portfolio to bitcoin.
“I think the balance of probabilities are that this is a much longer event – in terms of economic impacts – than anybody is pricing in,” Pal, who is the chief executive of research outfit Global Macro Investor and founder of business and finance media platform Real Vision, told the Lindzanity podcast.
“I think it’s a huge societal change that’s coming from all of this,” Pal said, adding that he thinks the coronavirus crisis will cause “the largest insolvency event in all history.”
The US unemployment rate could rise to more than 32% over the next three months as more than 47 million Americans lose their jobs, economists at the Federal Reserve warned this week.
Others have echoed this, with one official at the UK’s Bank of England warning unemployment in Britain and the US could surpass levels reached during the 1930s Great Depression within months.
The leisure, travel and tourism sector has been hit first with restaurants and bars closing their doors last month but other industries are in the firing line.
Retail, construction, childcare, and white collar jobs are all expected to be affected, with even dentists and physicians in the healthcare sector reporting difficulties.
The massive coronavirus-induced crash meant stock markets around the world suffered historic losses in the first three months of the year. The Dow Jones Industrial Average and London’s FTSE 100 recorded their biggest quarterly drops since 1987, plunging 23% and 25% respectively, while the S&P 500 lost 20% during the quarter, its worst since 2008.
Pal, a long-time bitcoin advocate, fears the economic and market turmoil has only just begun and is in the process of repositioning his portfolio to 25% bitcoin, 25% gold, 25% cash, and 25% trading opportunities to try to weather a deeper equity rout.
“The moment the spread hit Iran … and then Italy – that all happened over the span of three or four days – I was like: ‘time to panic before everybody else,’” Pal said, adding he predicted the coronavirus crisis would be the “biggest economic event of all of our lifetimes” back in late February.
Last year, Pal successfully foresaw the Fed’s move to cut interest rates to zero and warned that negative interest rates in the US were on the way.
<img alt aria-hidden="true" class="i-amphtml-intrinsic-sizer" role="presentation" src="data:image/svg+xml;charset=utf-8,”>The bitcoin price has fallen along with traditional markets due to the spreading coronavirus.
Bitcoin’s 2017 rally, which saw the bitcoin price soar from under $1,000 per bitcoin at the beginning of the year to around $20,000 by December, was largely driven by retail investors and so-called fear of missing out as early adopters became overnight millionaires.
“I haven’t seen this much organic new interest in bitcoin since early 2017 in my non-crypto circles,” said well-known crypto investor Ari Paul, the co-founder and chief investment officer of BlockTower Capital, via Twitter.
I haven’t seen this much organic new interest in bitcoin since early 2017 in my non-crypto circles. Got pinged by 3 separate old friends I haven’t spoken to in years about buying their first BTC yesterday.
— Ari Paul <img alt aria-hidden="true" class="i-amphtml-intrinsic-sizer" role="presentation" src="data:image/svg+xml;charset=utf-8,”> (@AriDavidPaul) April 2, 2020
Global interest in crypto skyrockets
Considering Bitcoin fell by nearly 50% during a single day in March, it may be easy to assume that interest in the cryptocurrency market is low; this would make sense, for a multi-billion-dollar asset to lose half of its value within a day would normally send consumers running for the hills, Nick Chong wrote in Cryptoslate.
But interestingly, data shows that demand for bitcoin and other cryptocurrencies is truly on the rise.
Data shared by Yassine Elmandjra – a crypto-asset analyst at tech investment fund and research firm ARK Invest – shows that the “relative Google search interest” for the term “bitcoin” is approaching all-time highs (first established at the peak of the 2017-2018 bubble) in “several emerging markets”: Peru, Guatemala, Zambia, Uruguay, Kenya, Nigeria, and Burkina Faso.
What’s interesting is that the strong surge in interest in the leading cryptocurrency has transpired over the past week or two, Elmandjra’s chart indicates, counteracting the sentiment that March’s crash deterred investors.
The relative Google search interest for Bitcoin is approaching all time highs in several emerging markets.
Burkina Faso, which saw zero Bitcoin interest in late 2017, has seen an explosive rise this month. pic.twitter.com/HeUEiN1rWn
It appears the growing demand for bitcoin and crypto is translating to the rest of the world, too.
As reported by CryptoSlate previously, Qiao Wang found that Coinbase Pro’s BTC order book shows that there are six times more buy orders than sell orders (-/+ $6,000 on each side). Furthermore, this outlet has detailed a trend of stablecoin issuers minting literally hundreds of millions of dollars worth of cryptocurrency over recent weeks.
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
