Deterioration of the US Dollar may instigate a 'Complete Cycle in Risk Assets,' claims former Goldman Sachs executive Raoul Pal
In a recent analysis, macroeconomics expert Raoul Pal has suggested that the weakening US dollar could trigger significant bullish momentum in risk assets such as stocks and cryptocurrencies. According to Pal, as the US dollar declines, dollar-denominated assets become less attractive, prompting investors to shift capital into alternative, riskier assets, which drives up their prices.
The US Dollar Index (DXY), currently sitting around 98, could fall below 90, potentially leading to a "full bubble cycle" across asset classes, according to Pal. This scenario could result in a sustained surge in stocks and cryptocurrencies.
Pal points to several key factors shaping this outlook. A recovering economic cycle would increase disposable income for both individuals and businesses, fueling demand for risk assets and potentially extending the bullish phase longer than expected. Governments facing high debt levels may be forced to increase liquidity to roll over debt, which Pal sees as another catalyst that could drive financial markets higher.
Historically, Bitcoin and cryptocurrencies have performed well when the US dollar weakens, and this dynamic could continue, potentially extending the current crypto cycle into 2026.
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It is important to note that Pal's predictions are not investment advice, and investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency, or digital assets.
In summary, Raoul Pal’s outlook suggests that a weakening US dollar, combined with an improving economic cycle and rising global liquidity, sets the stage for strong rallies in stocks and cryptocurrencies, possibly marking the start of a prolonged bullish phase in risk assets.
Investors may find themselves drawn towards cryptocurrencies and altcoins, as the weakening US dollar could prompt a "full bubble cycle" in various asset classes, according to Raoul Pal. This could potentially lead to a sustained surge in cryptocurrencies, as they have historically performed well when the US dollar weakens. Additionally, increasing liquidity among governments and a recovering economic cycle could further fuel the bullish momentum in the finance sector, including cryptocurrency investments.
