The Increase in M2 Money Supply Predicted to Propel Crypto into a ‘Super Massive Black Hole’, According to Raoul Pal
In recent years, the world has witnessed an unprecedented increase in the money supply, particularly in the form of M2 money supply. This surge has been driven by central banks’ efforts to stimulate economies and combat the effects of the global pandemic. However, according to renowned investor Raoul Pal, this surge in M2 money supply could have far-reaching consequences for the cryptocurrency market, potentially propelling it into what he calls a ‘super massive black hole.’
M2 money supply refers to the broadest measure of money supply, including physical currency, demand deposits, savings accounts, and other liquid assets. It is a key indicator of the overall liquidity in an economy. Over the past year, central banks worldwide have engaged in massive quantitative easing programs, injecting trillions of dollars into the financial system. This has led to a significant increase in M2 money supply, with some countries experiencing growth rates of over 20%.
Raoul Pal, a former hedge fund manager and founder of Real Vision Group, believes that this surge in M2 money supply will have profound implications for the cryptocurrency market. In a recent interview, he argued that the excess liquidity created by central banks will flow into alternative assets like cryptocurrencies, driving their prices to astronomical levels.
Pal’s theory is based on the concept of the Cantillon effect, which suggests that newly created money does not distribute evenly throughout an economy. Instead, it tends to benefit certain sectors or individuals first, creating wealth disparities. In this case, Pal argues that the excess liquidity will primarily benefit those who have exposure to cryptocurrencies, leading to a surge in demand and subsequently driving up their prices.
Furthermore, Pal points out that cryptocurrencies offer a unique value proposition in the current economic climate. With traditional fiat currencies facing the risk of inflation due to excessive money printing, cryptocurrencies like Bitcoin have emerged as a potential hedge against inflation. This narrative has gained traction among institutional investors and corporations, with many allocating a portion of their portfolios to cryptocurrencies as a store of value.
Pal’s prediction of a ‘super massive black hole’ for cryptocurrencies implies that the surge in demand and subsequent price appreciation will be so significant that it becomes unsustainable. While he acknowledges that the timing and magnitude of this event are uncertain, he believes that it is a matter of when, not if, it will occur.
However, it is important to note that not all experts share Pal’s view. Some argue that the relationship between M2 money supply and cryptocurrency prices is not as straightforward as he suggests. They point out that other factors, such as market sentiment, regulatory developments, and technological advancements, also play a significant role in determining cryptocurrency prices.
Additionally, skeptics argue that the cryptocurrency market is still relatively small compared to traditional financial markets. Therefore, even a surge in demand driven by excess liquidity may not be sufficient to propel cryptocurrencies into a ‘super massive black hole.’
In conclusion, the increase in M2 money supply predicted by Raoul Pal has sparked a debate about its potential impact on the cryptocurrency market. While Pal believes that the excess liquidity will drive up demand and prices to unprecedented levels, others remain skeptical. Only time will tell whether his prediction comes true or if other factors will shape the future of cryptocurrencies.