🔴 Flash Crash URGENT Update: Drinks With Raoul Pal (Round 19)

28:02Obviously, we've got this government shutdown. I'll come on to that in a sec. That may still cause another month or two of weaker ISM because of the government sector. Maybe not. We'll have to wait and see. I'm indifferent to it because we know where it's going. And behind this indicator is probably 50 to show a lead on this. But what's important here is the GMI dominoes. And this is the liquidity cascade. Out in the future, in this lovely, attractive purple color, is the GMI Financial Conditions Index. That lives nine months ahead of the ISM. That is what leads it all. That's driven by interest rates.

28:49It's driven by by commodity prices. It's driven by the dollar. And that has started weakening after a period of consolidation. So weakening here is this going up because it's inverted. So what we've got is easier financial conditions are going on. And we've seen that as rates have started to fall. So that is going on. That leads total liquidity by about six months. Now, there's a bit of a shifting lead lag here, but either way, we're expecting global liquidity to now follow GMI financial conditions. Does global liquidity have another down month? Probably, possibly, maybe two months. No, I think it's a month.

29:32And then what happens is it hooks up with financial conditions as we go into the end of the year. So October would print as a weaker month, obviously, because of what is happening with the US government shutdown, where there's less liquidity being pumped in the system. But I've come to that. And then the ISM follows suit. The ISM is where, when we get above 50 and start expanding, is where alt season is. It's where the Russell 2000 breaks out. It's where the small caps start going. It's where the riskier credit starts moving. That's the real game in town. You need a booming economy and lots of liquidity to drive the money shot, the way you can make money by just throwing a dart on your screen, and whatever it hits will go up.

30:19That's to come. Those are the banana zone points when things really accelerate. It's all coming. It's a matter of patience. Don't forget, the ISM has one data point a month, and you think you're trading it with your tick charts on your screen. you are sadly deluded. That's not how this works. So hence why you just kind of do nothing and let this play out. We've got the game here. The game here is that. The game here allows the asset prices to move because total liquidity is the thing that drives Bitcoin and the Nasdaq, which are the things we really care about. Interestingly, gold actually follows or actually is basically current financial conditions.

31:09Financial conditions and gold are all in the future. When you look at gold against total liquidity, it's telling you liquidity is about to explode. That's a really interesting thing. Gold has shifted around. Sometimes it's real rates, and other times it's other things. Other times it's just the dollar. Right now, gold's highest correlation in this kind of Bayesian world where probabilities shift and correlations shift, is it's all about financial conditions. And it's basically telling us the financial conditions here are going to explode weaker. Okay, super interesting. Will it work out exactly like this?

31:53Hell no. Will it be rhyming? Hell yes. So liquidity is rising. Okay, so what's really going to push a massive rise in liquidity? Well, hello, the PBOC. We've been using this chart of the Chinese central bank balance sheet, which is the only major government using their balance sheet right now, versus 10-year bond yields with a two-year lead. And it's been working perfectly since we started pulling this out in 2022. And what it's suggesting is we're now in the acceleration of the use of the PBOC balance sheet. Balance sheets are like the most powerful force multiplier. Somebody's going to be using one somewhere.

32:39Back in 2017, it was the Chinese that drove the entire crypto cycle because the US was tightening rates. It was doing QT. I mean, all of the bad things, all overridden by the fact that the PBOC, the UK, and the ECB all stepped on the gas. The PBOC is going to be stepping on the gas. Interesting. Look when it peaks. It peaks in 2026. That's super interesting. We also know that gold leads by a significant period of time, about 12 months versus ISM. That's telling us that in 12 months' time, we're still not peaking the business cycle. Has gold peaked today or not? I'm not sure. I still think it goes another leg from here, but we have some more volatility, more correction, another leg higher.

33:31I'm indifferent to it. I'm not in the gold trade right now. But what it does is give us a lead on the cycle. So go back to the gold chart. This is the chart that everyone on Twitter has got different time horizon for. This is the one we've been using. I've not really shared it super publicly, but this is gold with 188-day lead, so six months lead versus Bitcoin. It's a stunner, eh? It's an absolute stunner. So as of tomorrow, every single fucker on X is going to be using this chart and claiming it's theirs. If you would just remember, now the problem with this one is not the pink GMI one. So if you see this, just make sure that it's our chart because I've not seen this one.

34:15Everyone's using like a 90-day one or a 60-day one. This is the one, I think. What we've got is a slight divergence against, I don't think you can see my mouse, but there's a slight divergence versus that chart. And that doesn't look anything on the chart. I mean, it's noisy, right? Nothing fits perfectly. Keep trying to say this a thousand times and everyone goes, oh, why did that chart break? It's like, morons, please listen. You're not serious people. so what it suggests to me is we have catch-up to do and that goes into the end of the year and then we'd have a period where everyone says the cycle is over and what happens is nothing the bears go get really aggressive and it doesn't work the bulls get miserable and think start questioning their own lives and whether they fuck this whole thing up and nothing happens And then eventually, April, May, as ever, it explodes higher again.

35:14That's what this is telling you. I think this is probably the closest estimation in my head and what I think plays out. Let's go to April 17 to 18. There's a similar pattern here, similar kind of part in the cycle. Obviously, we think the cycle extends, but there are similarities. and we've got alligator jaws. Oh, no, alligator jaws. What normally alligator jaws will do is Bitcoin should be at about 140 ,000 now, but it's not. So it's diverged a bit. Oh, it's all broken. It's failed. No. I'll explain why. Because there's always reasons why things are different. Here's Bitcoin 2020 versus 2021.

36:02This seems like it's the right point in the cycle versus the previous chart, which was the final year of the cycle. This is the prior year of the cycle. And what we've got is this divergence again. I mean, look how beautifully tight that correlation is. Alligator jaws. Oh, well, it's all broken down, Raoul. This is all worthless. Spurious correlation, blah, blah, blah, blah, blah, sort of. NASDAQ versus Bitcoin. NASDAQ's been doing great. I've seen all of you kind of paper-handed ninnies all going, well, I'm just going to trade tech stocks now. And what's hilarious is the amount of people from crypto have gone, well, it's gold.

36:43I'm going to buy gold instead. It's all the same trade, leads and lags. But everything divided by Bitcoin is down 99.9 % over time. Just remember that when you're switching around. Tech stocks, I love. Great opportunities. is NASDAQ's been stronger than Bitcoin. Hmm, what gives? Aren't they supposed to be all driven by the same liquidity factor? Well, what gives is, well, here's the liquidity factor, global in two and NASDAQ. I'd rather use total global liquidity, but this is a weekly chart so it makes it easier. Basically, 97.5 % of all of NASDAQ is explained by the one variable, the most powerful macro a variable on earth, liquidity.

37:28And this is a proxy for total global liquidity. In Bitcoin, it's 90%. But occasionally, look at this in the NASDAQ. Do you remember when we came out and said, you need to buy the NASDAQ, it's well overshot versus liquidity? Guess what happened? The alligator jaws shut. We saw the alligator jaws the opposite way around here. It works because it's 97 % of everything that happens to the NASDAQ is the one variable. So why is this going on right now? Why is the NASDAQ diverging? Why is Bitcoin diverging from 2020? Why is it diverging here? Why is it diverging here? And the answer is that you haven't heard this from anybody yet, but this is, I talked to last month in the Drinks with Raoul that the thing that is happening is the Fed were tightening because the Treasury General account was being built ahead of the government shutdown.

38:28The Treasury General account got built. Meanwhile, the reverse repo got drained to zero. So there's one lever, if they don't use the balance sheet, there's one lever left for the Treasurer in the Fed to use in driving liquidity currently. And that is the Treasury General account. That's the checking account of the Fed. And so they've been building it up, putting some cash in the system ready for this moment. And what they then do is they will then release it by spending that money. But there's an issue with spending that money. There's a government shutdown. There's nothing to spend it on. So what we've got is this period since end of September, October, when guess what?

39:10Crypto started underperforming, where liquidity has stopped at the lows. This is the lows going back several years. That's normally driven by the Treasury general account rebuild, and then it normally bounces back and quarter end. We have both of those factors, and it's not bounced back because there's nothing to spend the money on because the government is suspended right now. So what you get is this weird pattern where there's no liquidity because they're not using stuff like the SFR, SLR, all of these other acronyms to inject money into the banking system. They're trying to get there. The Fed is cutting rates, but cutting rates doesn't really change liquidity.

39:51It changes financial conditions somewhat, but it doesn't change liquidity. So liquidity is kind of trapped in the US. And the US is quite dominant in liquidity because the dollar is the world's reserve currency. So this period of the government shutdown means that crypto is weak. Why is NASDAQ not weak and crypto is? Well, NASDAQ has been choppy. It's basically where it was when this whole period started. But crypto is weaker because crypto is further out the risk curve. There are no earnings in crypto, really. These are very long duration assets. So they are the most susceptible to liquidity.

40:34If liquidity withdraws, they fall the most. If liquidity comes in, they rise the most. So here we are where liquidity is being withdrawn or withheld, not really withdrawn. They're not trying to do that. They have no choice. They have no way, unless they can get through stuff through Congress, to inject liquidity unless there's a mini crisis. And we've seen a bit of wobbliness in the plumbing system, but not enough for them to actually go and do something to inject liquidity. So I'm sure Scott Besson and I'm sure the Fed are looking at this thinking, Christ, we've got no liquidity. We saw South Korea asking for unlimited swap lines.

41:10What does that say? It tells you the euro dollar market is too tight. So US liquidity, because it's still constrained by this one factor, there's no balance sheet being worked. There's no reverse repo being drained. We've got this one factor, and that's supposed to be driving all the US dollar liquidity. Well, that struggles. It struggles because it's not big enough to go all the way out to the euro dollar markets and to the South Korean banks and the European banks and the Japanese banks. So they need swap lines. So it's telling you that things are tight. And we know the answer to tightness in liquidity.

41:46It is the opposite. It is more cowbell.

41:53So as more cowbell comes in, things snap back. And that's where we are. We're at this kind of super mini version of 2019 where the Fed pivoted and everything had to change because of this liquidity issue. And this liquidity issue is what's driving stuff now. So I hope I've explained it to you. The government shut down. Yes, there's a couple of guys talking about it ending this week. the prediction markets are like mid-November. So let's think this could go on a little longer than expected. And in which case, liquidity is not coming into the system unless the Chinese really push further or somebody else, the Europeans, the Japanese, or one of the other large economies, the Canadians or the Aussies or the Brits do something.

42:44But really, we need everybody in concert, or at least not fighting it. And the Fed are kind of drawing down liquidity. And that is the reason why we saw this. The year-on-year global liquidity is being driven by the Fed here, pulling back a bit of liquidity, not from their desire, but their constraints of having no reverse repo. And so they have to figure out how to inject liquidity because they want this number, the ISM, to go up because the ISM going up wins them votes. And remember, next year is a voting year. When we go back to another voting year, 2016, 2018, what we got was Global M2 growing nicely and this Global M2 today doing the same kind of thing.

43:30So again, contextually, everything is good. Okay. A bit more interestingly, Intermarkets itself, Bollinger Bands. Bollinger Bands kind of tell you how much volatility that is within the market. And, sorry, a little snack. I do love those peanuts. And we are at the third lowest, second lowest bandwidth of Bollinger Bands in history of Bitcoin. Okay, so it's interesting. And interestingly, it reverses soon after. And interestingly, it always produces higher prices. And we pointed this out the last two times it happened. And the last two times it happened, it went up 107 % 260 days later. So what was that is, nine months.

44:21And it went up 125 % nine months later then, even though it had been much higher than that. And then back in 2016, which is like a similar period to now, it was up 189%, and it had been up over 200%. So the point being, these compressed Bollinger Bands, John Bollinger, I think, was on X talking about this, is like, these are an opportunity.

44:48Okay. Seasonality. We're at a really good point in the seasonality chart. and you would imagine that we are now diverting from this because of the, repeat after me, the Treasury General account and the government shutdown. Once that comes back in, we start climbing the curve to the end of the year. Does it start in November and we play catch-up? Either way, we should have a back end of the year that's very strong, and in the end, it'll have forgotten all about this shit, Much like we told you in April 2024, September 24, April 25. I mean, it's all the same shit. You forget about it after a while.

45:32Sorry, time for a vape.

45:36So I can obviously criticize you over your disgusting choice of foods. It's going to kill you. He says while drinking wine and smoking Chinese imported nicotine. I'm a dichotomy. I get it. I'm probably not a serious person either, but we're all in this together. So, talking about my mouth full, as I know many of you love to see. You don't, but nor does my mother. Russell 2000. Think of Russell 2000 as, remember I mentioned it before, a reflection of the business cycle and highly correlated to alts. alt russell 2000 you are around this level here and you generally have a bit of weakness november up only into the end of the year that is so common that i remember hedge funds trading this back when i was back in that west so we're talking 95

46:3994 is there was a hedge fund everest capital based out of florida every year trader would come on and quote huge size these call spreads where he sold puts in the indices um because in the in the last couple of months of the year because he figured out this pattern most people weren't really looking at it and it worked 60 70 percent of the time it was a great fucking trade and he did it every single year i knew him and um here's the trade that's the seasonality That's the seasonality. Remember, it's a liquidity-driven seasonality, and Bitcoin gets driven more than the Russell 2000, and it gets driven more than the NASDAQ.

47:23Sorry, the NASDAQ's more than the Russell 2000. That's where we are with the NASDAQ. So it's kind of November, December is where all the real gains are. So look at this. Seasonality is you kind of make no money from like August all the way through to November, and then you make a shit ton of money into the end of the year. Bitcoin. Oh, look, you don't really make any money all of September and October. And then somewhere in October, normally it's around the 16th, but this has been delayed because, repeat after me, the Treasury General account and the government shutdown, it's been delayed a bit.

48:00And then you get November and December. These are the months that make all the money. Now, here it says, well, the markets normally peak in the end of November. I would go back to this chart and say, I think this is more likely, where it peaks into January. And we've got many, many other charts that suggest it's like Jan, even Feb, where it peaks and then trade sideways into April or so and then goes higher again. So that's what we're looking at. Now, remember, for God's sake, we don't know whether this happens or not, whether this happens or not, or any other fucking variation. It's probabilistically what we think plays out.

48:46So if you do get along a big, nice leg where Bitcoin seasonality here, now these are including old cycles, so it's exaggerated in price terms. but let's say it goes from 300 to 900, it goes up 3x in two months. Let's say, let's halve that, it goes up 1.5x or 1x. That's when you take some lifestyle chips off in case we fuck this up. That's the bit where you're like, I don't really care if I've got it wrong. Or you buy some short-term puts because remember, volatility is super low. Right now, you should be buying calls because volatility is very cheap. IBIT calls. You should all own IBIT calls. That trade recommendation has been in Roverson Pro and GMI for a while.

49:39It will work out really well because we know this, the seasonality. We know why it's underperforming. We know that the Bollinger Bands are compressed. Therefore, volatility is cheap. Volatility will get more expensive as the market drives higher, and you'll get the double kicker, and you can make some real money out of that. So this is the kind of ideas you get in Real Vision because you lazy fuckers haven't joined. I'm going to say again, go to my tweet, please, at RaulGMI, if you're watching this on YouTube or Spotify, and there, go to my tweet and sign up to the wait list of the new platform.

50:17You know, if you've ever wished you could ask me a question, any question, 24-7, well, now you can. The Raule Pal bot is my AI assistant trained on all of my insights, macro research, macro views, even wine and travel knowledge. The Raule bot is available for everybody who subscribes to either Connect, Alpha or Pro. It can really change your life. You get me as your mentor 24-7. The link's in the description. I think you're going to love it. This is the kind of stuff that's on Real Vision. And you watching it once a month, you get none of the background of all of this and the depth of what happens and all the community ideas, the trade ideas, the research notes, and all of the stuff that's there for you to succeed.

51:02And that's what we try and do is just try and give people the frameworks of understanding and they themselves. And we have, you know, within Real Vision Pro, there's myself and Julian Battelle at GMI. There's Andreas and...

51:16I've now forgotten his name. No, Andreas and Mikkel. Michael, who are at Steno Research, amazing. They nailed it this year. They were up 70%. They're having a bit of a pullback now, like everybody is. Absolutely nailed it. And then Jamie Coots as well on the pure crypto side, but with the edge of macro. Everybody's there to help you, and then the community's there to help you around it. Now, it's like seasonality. It's all there to play for. So this is the game. the game is just follow the fucking game patience stop throwing poo at each other let me show you a quick few charts this is a lot of alpha i've done an hour now and i'm going to answer the questions on real vision and i'm also going to announce who won the two thousand dollars that was supposed to be a thousand dollars but i thought fuck it's not enough money because you guys aren't making any money right now because the market's chopping you around no that's the wrong screen this is the issue when i go rogue let's try that one

52:28okay let's start with bitcoin broadening pattern these tend to to be um continuation patterns i know you get them occasion is reversal patterns. I think this is a continuation pattern. And what happens is somewhere around here, we might sell off further because the government's not reopened. When it reopens, the government starts spending, writing checks quickly. They've got backlog of pay, inject massive amounts of liquidity, goes into the banking system, number go up, right? We need that to happen. And I think the shit fight will continue. This is the second longest government shutdown in history.

53:10We may end up being the longest, let's see. But when it comes, number reverse. So it's Bitcoin, nothing really to see. Ethereum. I mean, what a cutie of a chart. One of the world's great charts. Here we are, retesting the breakout of the wedge, one of the world's greatest wedges. We saw these kind of things here. It breaks out, it does this remember what it broke out here did this and then eventually did that that move was 3 10 i mean it's like a 10x so what's it going to be from here who knows 10 to 15 oh my lovely accomplice has come to refill my wine and she will carefully no that's too little nice try impossible to get good stuff thank you she also rolled her eyes at me oh god so good okay so that's ETH daily again often Bitcoin these things wick could it come back down here could this be a little mini wedge could it come down yeah probably does it come down to here possibly don't really care and you shouldn't either if you do You're doing something wrong.

54:30You're either using leverage or you are too short-term in your time horizon. Solana. Oh, my God. Look at that. Let's go back to ETH. So this Solana chart is this period in ETH. Sort of because the pandemic kind of screwed it up a bit. But let's call it this period in ETH.

55:05is what we're seeing in Solana now.

55:13So it kind of did the wedge pattern. Again, depending how you draw it, nothing's ever perfect. If this is a flat top wedge pattern, and somewhere around here it finds its base, hooks up, and then it will have the power to break through, and we can have a serious move, the move we've been expecting. That's still to come. That's how the second cycle plays out. Then you consolidate again. And that seems to be, you know, if we go back to Bitcoin, let me change that to the monthly chart.

55:46When we go to Bitcoin monthly chart, sorry, la, la, la, la, la, just excuse me for a moment while I fuck around with this. oh i need to change it to a not coinbase let's go to okay so you know if we look at kind of the second cycle it did this i had the correction it's they all do the same kind of pattern as you get the adoption the first move is brutal is brutally large and a decent size pullback and that was a huge pullback doesn't look like in the chart But guess what? Let me change this from a log chart just so you can just see how brutal it was to own Bitcoin back in the early days. It was that brutal.

56:32It was so brutal that you have this massive run, enormous, gigantic pullback, and then a stupid run, gigantic pullback, stupid run, gigantic pullback, stupid run. Right. You get the picture. Okay, so that's Solana. Nothing exciting to see. SUI. Oh, look at that chart. This is a first cycle token. Tends to be good in the first cycle because it's all full of promises and a lower free float, and capital can drive these higher. Nothing wrong going on here. We're just basically in a wedge. So do we come back down to the wedge? Well, let's have a look at the daily chart. Daily chart would suggest, let me just make sure it's log.

57:23I hate it when I screw up everything, but you're used to me by now, screwing up everything. So could we come further back down in here? Yeah. Could we even test$2 again? Yeah. Does it change anything? No. What should we be doing? Buying. and not going, oh my God, it's going to die. Raoul said Sue is going to go up and he's a moron. And it's just like, it's terrible. And I've got everything wrong. And it's the worst thing. Nothing. When you look at the macro framework, you look at the longer term charts, you just say, well, I might as well turn my computer off and stop fucking around on X, looking at some traders saying the top is in.

58:07It's highly unlikely to be in. Highly unlikely because the macro is nowhere in. And I don't get it. I don't get all these people talking about it's the end of the business cycle. It's moronic to say that. It's the beginning of the business cycle, not the end. It cannot be the end of the crypto cycle if it is the beginning of the business cycle. It's as simple as that. But no, no, people just want to use a chart and suggest that no macro matters. They want to use whatever it is that it do. We try and put as much together to get probabilistically right. Will we be right in everything? Hell no. When I look at some of these as well, this is Sui Owly.

58:49I love this chart. This is Sui ETH. We used this when we really went overweight, Sui, back in 2024. And we've got a very similar pattern here. What we'll see is a pulldown here somewhere, and then we should break this trend, and then we come back up here, and we should get a dramatic outperformance. um this is sui solana we got in really overweight sui here still been outperforming solana and since that date and so it's been the right position to hold and then we've been pulling back to the bottom of this pattern and what we should see is over time we'll stabilize somewhere around here whether we break back down through here and then come up and then we should if we're right breakthrough in 2036 all the way through here.

59:42So we're still pretty happy about all of this stuff. So those are the general charts. I won't go through the million charts. And frankly, most of you aren't Real Vision members. But those of you who are, I'm going to see you on the platform shortly. So remember, final thing is, who was the winner that thought he was going to get a grand, but actually got two grand because I like Albarino. And I like you lovely lot of Philistines. I mean, I love you. I love hanging out with you. The laughter we have doing this, the amount of insults that you will take, and the amount of trolling you give me, it's all good.

1:00:21It's all good fun. We're all in this together, right? It's a stupid game. But us not to live with this much volatility, with all our hopes and dreams tied up in a fucking yellow fruit it's a lyrish remember that the yellow fruit thing let me just go back and re-explain this to you let me sorry i'm just moving my charts around um so pretend you can see what i'm doing uh which you can't um okay let's do this once more when banana where banana blah blah blah one banana two banana three banana four okay this is how it works kids the banana zone. So we told you, we put out all of our signals based on liquidity back in 2022 and said the low is in.

1:01:04We really got that right. We bought Solana. Solana absolutely crushed it. Then we switched later. And then back in 20, it was 2024, we said, okay, we're now about to start the banana zone. Why? Because we're starting to break the new all-time highs. And this is Bitcoin. So we actually gave out the signal on liquidity in that week, the 5th of August week. I was in Zambia, came back. We said, yeah, banana zone is about to start. And by September, we said, this is it. And what happens? The first leg up goes from 52 ,000 to 108 ,000. I knew a lot of go, oh, okay, bananas. And then we said, look, there's a phase one correction.

1:01:47Remember Global M2 was correcting? Oh, it comes back down. That's the phase one correction of the banana zone. Phase two of the banana zone, we're still in it. We've barely started it. The phase two correction should come from much higher, pulls back and then goes higher. This is not the phase two correction. This is still part of the banana zone. So there we are. It's just like the banana zone doesn't look obvious. We had all this shit here too. But when you look back on that chart, it's like, oh yeah, it's a banana. And you go back here, oh, it's a banana. But you fuckers would have been going You can see it's all over.

1:02:23You've never called the banana zone. You've got it all wrong. It's stupid. All of this time, all the way up, you'll have done the same thing. But when you go back and look, they're bananas. Now, this banana is going to be longer in time. So therefore, less spiky in price at this point. Maybe that'll come later. Anyway, that's all of that. I'm going to say, Jimmy Bull, you've won$2 ,000 in USDC on Solana. So good for you, Jimmy Bull. Well done for adding yourself to the wait list. The rest of you, we've got five prizes of$1 ,000. If you knock it out of the park and double the size of our list, the wait list, by telling your friends, retweeting, doing all the things you're supposed to be doing, we'll give a$5 ,000 prize to somebody.

1:03:18And you know me, I don't really stick to any of this stuff. So if you really knock it out of the park, I'll throw in some other stuff too. Maybe some merch. Whatever I feel like, because fuck it, I can. So join that wait list. Do me a favor. If you're watching this on YouTube, click subscribe, like, all of the things that matter on X. Retweet this. And the rest of you, I'll see you on Real Vision where the cool kids hang out. We exchange real alpha. We know how the world works. We have an understanding of each other. we all have that confidence everyone's got kind of shiny white teeth and like ding because they just know how the world works because they're on real vision peace out you obviously enjoyed the episode because you're here with me at the end but listen don't forget to go to realvision.com forward slash join and grab a free membership it's an incredible community packed with alpha great investment ideas and the research that you need to help you unfuck your future so get started now, go to realvision.com forward slash join.