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Raoul Pal Delivers Urgent Update on Market Flash Crash
- Raoul Pal champions a long-term “buy and hold” strategy for investments, deeming them less stressful and more effective than short-term trading.
- He attributes the recent market crash not just to the yen carry trade but to broader issues like slow global economies and a strong US dollar.
- Pal recommends limiting exposure to high-risk assets like memecoins to no more than 10% of a portfolio, prioritising larger, more stable cryptocurrencies.
In times of volatility, it can help to look to the experts who have weathered a storm or two before. Raoul Pal can certainly be counted in that category, as a former Goldman Sachs man, Pal has been around long enough to have seen market turmoil similar to what we see now.
Related: Japanese Market Sees Worst Losses Since 1987, Traders Blame Carry Trade for Crypto Crash
However, if you are a trader then his advice is probably not for you, as Pal says his investment horizon is long-term and “buy and hold works much easier and it’s much less stressful”.
If you are [on] a shorter time horizon, I can’t really help you, because that’s a very difficult thing to do in crypto.
Raoul Pal The Story (Of the Crash) Is Much Bigger Than the Yen
While many blame the yen carry trade for the market crash, Pal says it goes way beyond that. The real reason, according to Pal? Slow global economies.
The Real Vision founder explains that slow economies like Europe and China are in need of a stimulus. And while the US Fed has hinted at rate cuts in September, which is seen as a good signal by market participants, another thing is holding back markets. According to Pal, that’s the strong US Dollar.
At this point in the cycle when inflation is falling fast, generally you need a weaker dollar, that brings global growth.
Raoul Pal Long story short, Pal says that the recent carry trade in Japan was a move to push down the US Dollar which ultimately could set off a new round of liquidity injections and a new bull run.
We are setting ourselves up for liquidity but we need to digest the volatility of the currency move first. How long will that take? Usually it takes a week, two weeks, three weeks, sometimes four weeks.
Raoul Pal Pal: Look Forward to Corrections, But Don’t Load Up on Too Many Memecoins
Pal says you should always expect corrections and you shouldn’t be afraid of them. After all, they are a time to load up if you still have capital to invest.
You can expect anything between a 30 and 50% correction to happen and you shouldn’t be fazed by them, you should be looking forward to them.
Raoul Pal 
Pal says bigger cryptos like Bitcoin and Ethereum are preferred over smaller altcoins and memes.
When you’ve got your asset allocation…I’d rather hold the bigger tokens and not have too much stuff further out the risk curve. I own some memes, but I don’t own more than 10%.
Raoul Pal He advises to be careful with memecoins even though they may have a greater upside potential – yes, you guessed it – they carry greater risk.
Related: Australian Bitcoin ETFs See Net In-Flows as Investors Ignore Market Crash and Panic
Please don’t own more than 10% in the stupid liquid stuff because you think it can do 100x. [I] understand that, but it’ll still make a lot of money if it’s less than 10% of your portfolio, but it won’t do if your whole portfolio is [only in] those and it goes down 99%.
Raoul Pal 
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
