Life-Changing Money: Ride the Banana Zone with Raoul Pal

0:00Hi, everyone. I'm Raoul Pal, the CEO and co-founder of Real Vision. Here at Real Vision, we're committed to give you the best knowledge, tools, and network to help you succeed in your financial future. If you're enjoying this podcast, please take a moment to give it a five-star rating. It truly helps us continue to bring top-tier content. Thank you so much. Hi, everyone. I'm Rel Pal, and welcome to my show, The Journeyman, where we explore that nexus of macro crypto in the exponential age of technology. Now, it's getting towards Christmas and the holiday season. We're all kind of getting our travel plans sorted out, thinking about spending time with friends and family.

0:39I thought I'd do a little special for you. What I'm going to do is release the video I did for the Real Vision Festival of Learning that was only on the Real Vision platform about my presentation of the year ahead for crypto, how the banana zone plays out. Hopefully, it'll be a good Christmas present to you and give you some idea how to navigate. Now, it was a few weeks old, but I think it still holds up very well today. You know, it's been an extraordinary year. We've interviewed, or I've managed to interview some amazing people on the channel. We've explored everything from AI consciousness to crypto and everything in the middle.

1:13It's a real privilege to be able to have these conversations and share them with you. And hopefully you're seeing how all of these things fit together. Crypto is just one of the parts of the equation, as is macro, as is technology. We're all going towards this economic singularity, where I think we've got maybe five years before the entire system changes. We've got five years to make as much money as possible. so we can protect ourselves and our families from the massive change that lies ahead. You can already see it. You know, if we're starting to see that AIs have consciousness and crypto is being adopted by the White House, what happens next year?

1:48What happens when the robots come? What happens when we're going to Mars? There is so much that is happening and so much will become complicated. And I'll be there for you on that journey to navigate, to make sense of it all, and to point you in the right direction. But anyway, all I want to do is really wish you a fantastic Christmas or holiday season and an amazing new year. And I'll see you back in 2025 for more of The Journeyman when I'll take you on that journey into the future. Take care out there. Join me, Raoul Powell, as I go on a journey of discovery through the macro, crypto and exponential age landscapes.

2:28In The Journeyman, I talk to the smartest people in the world so we can all become smarter together.

2:39Welcome everybody to the Festival of Learning. Festival of Learning, the Banana Zone edition. Festival of Learning is something that we've been doing since the pandemic where we all get together and we have an intense day of learning about topics that are important to us. The banana zone and crypto are the most important topics of the moment. And we want to help you in your journey of understanding. So you get to understand how better to navigate this. So I'm going to do a presentation first. Then Jamie Coote, who's our chief crypto analyst. You see him mainly in the pro crypto tier. He will come on, do a presentation about the nexus of AI and crypto.

3:22And then we've got lots of people from Meme Coins to a great presentation by Sui and a really fun panel with Club Devan. Sui and Club Devan, thank you guys, are sponsors of the Festival of Learning. You'll see some great presentations from them, both ultra interesting. Hi, Raoul here. Listen, I think we've got until 2030 before the economic singularity arrives. Now, it might not be the exact date, but it's around then. So we have about six years to figure out how to unfuck our future. I've put together a report to help you called Prepare for 2030. It's going to help you take the first steps in that journey to make sure you're secure past 2030.

4:04So just click on the link below and start your journey now. Okay, so let's get on to riding the banana with Raoul, which is my session now, which is a ridiculous name, but that's what I've come up with. Now, I just want to just level set with you. The first thing I want you to do is stop doing this. This is the five-minute lead chart of Bitcoin, and it's all drama. I want you to zoom out and get a proper perspective. Stop the drama of Twitter of, oh my God, it broke 100 ,000, it's falling below 100 ,000, it's fallen 10 ,000 points, and then it's going back up again. All of this is the wrong way to trade crypto, to capture that opportunity to unfuck your future.

4:51So I'm going to show you the big picture. So I'll stop sharing this screen and flip you onto a slideshow that I've put together for you all. Now, what's important about this is when I do these presentations, this is not Real Vision's views. These are my views, Raoul Pal. And my views, the DNA of my views come from Global Macro Investor. my premium research service, that's not part of Real Vision. People in Real Vision get access to that level of thinking in Real Vision Pro. Real Vision Pro is where I outline it, the Real Vision members, my macro crypto exponential age of technology nexus, and that incredible portfolio, which is one of the best performing portfolios I've ever seen, luckily.

5:38Also, many of these charts also do appear in Real Vision Plus as part of the macro investing tool. Julian Battelle, who works with me at GMI, he's the chief macro strategist there. His ideas and my ideas come into that MIT product as well, but it's less in depth, doesn't give you the nuance of really what's behind it, which is what the pro tiers are all about, just so you understand. So anyway, let's cut to the presentation. So I can run you through the banana zone, where we are, where we're going. Okay. So about, well, in September, we started producing this chart. You already know that I have identified that global liquidity is the driver of crypto assets.

6:29And for vast periods of time, they actually just mirror global liquidity. When you get into the speculative blow-off season, it actually tends to decouple to the upside because these are exponential assets. But right now, we're still in the point where they're highly coupled. So in September, we showed this chart and said, the first leg of the banana zone is coming. Cuts it today. I mean, that's fucking perfect. I didn't expect that to work as well as that. I mean, that is literally perfect. And that chart suggests that we go somewhere close to 110 ,000, maybe we overshoot it, whatever it is, but into the end of the year before we correct.

7:13So this is the first phase of the banana zone. So how is it looking in markets themselves? Let's flip through some charts. Now, these were put together yesterday. We've moved around a bit, but SUI, which you know, A, the response of this. B, as you know, I'm on the foundation of SUI. But as I've always said, I'm a nursery with my capital. This has been one of our core recommendations in both Global Macro Investor and ProCrypto. And it's been doing extraordinarily well. The short-term chart of this, breakout. Solana. Here's a daily chart of Solana. Solana had a big wedge pattern, big consolidation, broke out.

7:51We're re-wedging right now. We should break out again into year end to follow that liquidity pattern, banana zone. Ethereum, this is the weekly chart of Ethereum. The weekly chart of Ethereum hasn't yet broken out, but it's very close. So whether we break out this month, which is my hunch, and then maybe retest in the January pullback from liquidity, or we pull back here for a bit and then explode through afterwards. Either way, that chart, that wedge pattern, to me, is one of the most powerful patterns in all of crypto and suggests we've got a very big move in Ethereum to come. The other thing that I look at is I look at the cross rates between various crypto to try and pick the strongest one.

8:39I've already shown that Solana is very strong and it's expected to keep going higher. But when I compare SUI against Solana, it's starting to break out from this inverse head and shoulders pattern, which suggests to me that I would switch more assets from Solana into SUI. That's not saying Solana is going to go down. In fact, I think Solana does extremely well. And you should be overweighted there because it is a second cycle, more proven protocol. Well, SWE is newer and riskier, but it looks like the alpha is going to come from the new token, the new performer of SWE. And we can hear Adany talking about this later today when Chris Bullock interviews him about SWE.

9:27To show another interesting chart that I quite like is XRP has been super strong. but really what we've seen is the upward trend of SWE outperformance. We hit the bottom of the channel and we're likely to outperform XRP going forwards again in that ongoing relative outperformance. Again, that's not saying XRP goes down but I'm just giving you the perspective of these cross rates so you understand the nuance of markets because really a lot of people have too much asset spread across too many things. When you start comparing one asset to the other, you can actually narrow it down and concentrate your best.

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11:28And those would be Solana, Bitcoin, Ethereum. Then you can have weightings in whatever you choose it to be, where you think you're going to find outperformance, including some means, which should be a much smaller part of your portfolio, because you're likely to get wrecked. You'll have fun doing so, but you're likely to get wrecked. Okay, next chart, XRP itself, fabulous pattern. Look at wedge after wedge after wedge after wedge. So we're just building another wedge now, ready for the next break higher. So that move is clearly not done. If you look at the weekly chart of XRP, it's a stunner. This massive seven-year wedge is broken.

12:10Who knows where this chart goes to? It's very powerful. But then go back to that chart of SWE versus XRP, and it's suggesting that SWE should even outperform this. So that's the perspective I have. Now, it's not always going to be 100 % right, but that's how I look at it. Here's Sui Salama. So we've been consolidating the wedge, we had the huge outperformance, consolidation, breakout, retest the breakout zone. Next leg should be Sui's favor because of the long-term chart. And this is, sorry, this is the weekly chart. And you saw the daily chart earlier with the inverse head and shoulders, stuff like that.

12:50So there's a lot of great charts that are lining up that say banana zone. In mean land, whiff, dog whiff hat, inverse head and shoulders, broke out, retest, next leg higher, should come shortly. Jupiter. So Jupiter is kind of a leverage bet on Sol because it's a dex on Sol, so more Sol activity, more Jupiter goes up. So it's broken out as well. and looks very positive. These kind of wedge patterns that we see are immensely powerful. So this is beta to sol. Another one that did a very similar pattern was MOG. It had exactly the same wedge and then it exploded higher. And it's been exploding higher since as it ended up getting listed on the major exchanges.

13:39So again, you can see these patterns, they're human behavior on a chart, and they don't all happen at the same time. This is the hard thing about the banana zone, is different things pop at different times. And you've always, trust me, always got the feeling you've got the wrong token. Then yours pumps and then something else pumps. And you're like, do I chase this one? Have I got it wrong? Stick with your program. You'll probably get it right over time if you've used the don't fuck this up thesis of asset allocation. So don't worry. FOMO is a natural part of this market. it, the real temptation is to chase every breakout.

14:20Don't do that because they roll over time, they repeat the same patterns, but they're not all 100 % in the same phase. The other one that's an absolute stunner of a chart is Doge. Doge just keeps doing the same thing every cycle. It does consolidation, consolidation, consolidation, explosion, consolidation, consolidation consolidation explosion the explosion is always the banana zone and doge is the strongest characteristic of the banana zone it's this massive meme um that gets the world's attention it has been going since 2013 and it has been unstoppable and look at the breakout levels now if we repeat anything like we did the last two uh banana zone periods we've got a hell of a ride to come.

15:10So Doge is something that I keep a close focus on. And again, once we zoom down to the shorter term time horizon, Doge, and again, this is slightly outdated from yesterday, but Doge is wedging yet again. These wedges are fabulous patterns in bull markets or bear markets, depending which way you're looking at, but they consolidation, the pause that refreshes, next leg higher. So we're expecting any day now, digestion of a little bit of the move we had with Bitcoin going to 104 ,000, consolidate, consolidate, then something will break. I don't know what it was. SUI broke yesterday, broke to the upside.

15:49Now it's consolidating. Maybe it's doge tomorrow. And this rolling breakouts, breakouts, breakouts is how it happens. And consolidation, consolidation, consolidation. And as people build confidence, we start moving into, okay, bigger correction to come. Doge Bitcoin is like, I think, the most humorous chart in all of humanity. What it's saying is since Doge came out in 2013, it's outperformed Bitcoin by 500%. It's suggesting that Doge is the harvest currency in the known galaxy. Now, if that chart plays out and it breaks that kind of downward sloping wedge or whatever channel, and we go to a new high, I mean, that's telling us something that we can't get our heads around, that Doge is literally a better currency than Bitcoin.

16:42And I know that's contentious. I'm just looking at the charts. I find it hilarious. We may be living in a simulation, and it's probably Elon simulation. Therefore, this works. One of the memes you all know I've got, smoking chicken fish. Smoking chicken fish did a perfect rip up and then long-term consolidation, which happens to be a wick off reaccumulation pattern. We should expect it to go to the top of the range around the sort of 120, 130 level, chop around there for a bit and then explode higher. So you can use these kinds of patterns as well. But again, they're all suggestive that we're in the banana zone, the first leg of the banana zone.

17:26Not everything sinks. They come one after the other off the other. Then we get a big correction. And maybe in that bigger correction, it could be the majors correct and the alts explode higher. I'm not sure yet. We'll have to wait and see. I don't trade it. And we'll talk about that correction in a bit. Smoking chicken fish broke out of the downward sloping wedge pattern as well. So again, just more confirmation. Here's a leverage play on SWE, which is deep, deep book, which is the liquidity layer for SWE. So the more, if you think of like the Jupiter idea, the more activity that happens on SWE, the more deep book is like to go up.

18:04And it's like$180 million right now as an entire value. Now, if we're right about SWE, that it gets into well into the top 10 and potentially the top five in this cycle, well, the liquidity layer is going to be extremely valuable. So, you know, there could potentially, and it's not a recommendation, but it could do a 10x. So, this is how I'm saying there are ways of having leverage plays on top. Okay, let's go back to the liquidity story. So, the liquidity story here is, oh, my God, and I've been set this chart a thousand times by people, oh, my God, what happens? Is it all over? Is this the peak?

18:40Is this the end? Do we get out now? What happens? What happens? Panic, panic, panic, panic, bullshit. Okay. We had exactly the same thing last time Trump was elected. The dollar was strong. Rates went up. Liquidity contracted. The market had a big rally, which is Bitcoin. And then in January, because of the lag, what we found was a sharp 27 % correction in Bitcoin. and then it ripped higher. Ripped higher so much, in fact, that it went up 23x. Now, I'm not expecting that because this was a much earlier cycle. But what we're saying is that correction is not to fear. That correction is just a marker point from phase one of the banana zone to phase two of the banana zone.

19:31Phase two of the banana zone usually goes into US tax season, which is like April. Then there's usually a consolidation because people have to sell tokens to pay taxes. And then there's usually phase three of the banana zone is the rip into year end. And that's all driven by the liquidity cycle. So we can see these banana zone periods as they start appearing. Bitcoin just does this every time like Doge does. So we've just broken that part of the cycle. So this is the start of the banana zone as we start accelerating higher. So going back to liquidity, here's Global M2. You see, Global M2 does this a lot.

20:12It also wedges. I love a wedge. They're the best chart patterns in the world. And what happens is it has a break higher than this consolidation. It's happened every time we've got to the banana zone period, the kind of US election cycle, stuff like that. So we've done that. We've corrected the breakout. Now, Global M2 is actually driven by the strength of the dollar. Now, the dollar has started to weaken. We expect it to weaken going forwards. And that will then reignite the next phase of the banana zone as we start bouncing higher. You can see those corrections in them too were short. Now, the reason being is we've got to roll all of this global liquidity.

20:50We've got massive amounts of debt to roll over and you need liquidity to do it. So that is the game, the big game, the everything code game that I've talked to you about. so the everything code game is very much at play this is a phase the early phase of the breakout this year is the year of liquidity and that's why the year ahead and that's why the banana zone plays out so beautifully so we talked about global m2 being driven by the dollar so let's look at the dollar and also rates is the other part of financial conditions and liquidity So what we're finding is that the dollar, as you can see, and rates had moved away from trend.

21:38That was the strength that we saw. This is what creates the down-moving global liquidity. Now, what's interesting is the City Economic Surprises Index, which is an index of whether the economy is beating forecasts or underperforming forecasts. says we should now have a period of underperforming forecasts because it was driven by the tightening of conditions from the dollar and rates. Now, obviously, we know if the economy starts underperforming forecasts, like we just saw the unemployment rate rise to 4.2%. Once we start to see things like that happening, what happens is people start thinking about we need to cut rates more.

22:23So that's a very interesting thing. so here in white is is rate cuts priced in very few rate cuts priced in so there's like uh i don't know what the scale is here but there's very little rate cuts priced in but it's driven on a forward basis by the dollar and the long end so it's now saying as we weaken economic growth we should start to see rate cuts and then as you can see we're starting to see the pickup up again in financial conditions, which is important. And I'll come into that in a minute. So when you put it all together, they're all the same thing. FEG rate cuts, the DXY, 10-year bond yields, they're all highly mirroring each other.

23:0810-year bond yields seem to be suggesting faster and faster that the dollar should roll over and rates should roll over too. That creates financial conditions. And now what we've got here is financial conditions index, which is rates, the dollar and oil prices, has been consolidating for a period of time. And it is suggesting that the ISM, which is the business cycle, the Institute of Supply Manager Survey, should be much higher, i.e. we've got economic growth to come. It leads by nine months. So in nine months' time, the economy will be a lot stronger than it is today. And this is going to be important for you.

23:49So all of the stuff we talked about, rates, the dollar, even oil prices, all drive financial conditions, which drives cryptocurrencies, which drives markets in general, which drives the business cycle. When we look at the forward-looking basis on the business cycle, we can see things like the Philly Fed, well, their new orders index is exploding higher. Now, whether this is just on the Trump victory or whether it's on orders they see in advance, not sure yet. Philly Fed expectations index exploding higher. Empire Manufacturing, that's for New York, exploding higher, all suggesting the ISM is going to be super strong going forwards.

24:33Why this matters is the ISM, the business cycle, is the coincident factor for the Ethereum Bitcoin cross. So that says, as ISM starts rising, ETH starts outperforming Bitcoin. And why is that? Well, it's a function of ISM being confidence in the economy, disposable income, or free cash flows from businesses. People have more money and feel better and have more confidence as the ISM goes up. The business cycle's better. We're all earning a bit more. Our businesses are doing better. We're making a bit more profits. And we recycle those profits into investments. And we go further out the risk curve, which would be Ethereum.

25:21We might also like Ethereum because it has a yield, while Bitcoin doesn't. So we might park more of our money into that yield as well to make our money grow for us. So anyway, it's a big factor for ETH Bitcoin, the business cycle. Crypto and macro are the same thing. And that's a really important thing to note. Most of the financial establishment hasn't understood this, but at Global Macro Investor, we have entirely led the way on this. We have thousands of charts. We have more in-depth research on that nexus of macro and crypto than literally anybody else on earth. And we're very confident in how this plays out.

25:57So when we go back to the price chart, hey, Presto, it's another wedge. This is the ETH Bitcoin weekly cross. If you remember when I I started this presentation and I said, stop using two shorter term charts because all you'd see on Twitter is ETH's terrible. It's falling and it's just going to underperform forever. Look at the big picture. ETH basically is the same level versus Bitcoin that it was in 2017. It has held value over time, which is very important. It shows the Lindy effect that this thing is around and it's here to stay. So what we're doing is bouncing off the bottom channel now, just as the ISM is about to pick up.

26:33And we either break that wedge, which is a big deal, because that would be ETH outperforming Bitcoin even further, or we stay in that larger range but get to the top of the range. My base case is we break out and ETH outperforms. Now, I know nobody can believe that right now, but ETH is a very different beast to Bitcoin. ETH is a platform. It's a compute platform. It's a storage platform. It's a huge system. Well, Bitcoin is more of a currency, a store of value, collateral layer. They're just very different things. And it's kind of stupid and idiotic that we compare them. But we're here to make money and not have a philosophical debate about what Bitcoin is versus Ethereum.

27:18What I'm here to do is help all of us unfuck our futures. And it feels that overweighting Ethereum, if you've got Ethereum, that's the way to do it versus Bitcoin. Now, the ISM also has another little piece of magic. It actually is the signifier for altcoin season. So altcoin is a percent of Bitcoin total market cap. Altcoins start massively outperforming. And again, it's driven by the same thing. Optimism, a bit more money, a bit more savings in your pocket, and you wanting to make your money work for you, you go further out the risk curve. So the key signal for altcoin season is the ISM going higher.

28:01and I've showed you why we think it goes higher. All of our work suggests that it will. ISM is also, this chart is the same actually for NFTs. That's why we've started to see NFTs rise. It's all driven by the same thing. NFTs are people's savings get recycled into a long-term asset. And then if we look at the crypto-topic market cap, excluding the top 10, known as others on TradingView, lo and behold a series of beautiful wedges that wedge pattern is just is the it's the chart pattern of the gods that and the head and shoulders pattern and here we go and a couple of the wick offs and here we go wedge massive break wedge massive break wedge i would suggest massive break so where does this go we're at 400 um 400 billion dollars here do we go to four trillion dollars $6 trillion?