If we are to believe the popular macro-economist Raoul Pal, the bitcoin (BTC) is facing a special rally. Pal expects that the bitcoin price will rise to $ 50,000 in the foreseeable future. If you ask Pal, the banking crisis is a time when bitcoin can prove itself as a safe alternative.
Bitcoin short squeeze
Part of the uptick in bitcoin, according to Pal, is in a so-called short squeeze. If many traders simultaneously bet on a fall in the bitcoin price (go short) and the price just starts to rise, the positions of these traders will be liquidated. A massive liquidation of short positions, or a short squeeze, can accelerate the price increase.
To open a short position, you must borrow the asset in question and then sell it. For example, you borrow bitcoin from a stock exchange platform, then sell it immediately and return it to the platform at a later time. If the price drops, you can buy back bitcoin cheaper. If the opposite happens, it can sometimes cause problems.
At the moment, the price is rising massively, making it possible that traders had to close many short positions at the same time. Those traders then all have to buy bitcoin at the same time to meet their obligations, which pushes the price even further and can push even more people out of a short position.
Price explosion coming?
If you ask Pal, the growing interest in bitcoin is similar to the trend we saw in 2013. According to the investor, the crypto industry is ready for a few years of extreme growth that bitcoin will lead. On the other hand, this growth will also entail additional legislation and regulations and stricter supervision.
Despite this, Raoul Pal is extreme bullish about the future of bitcoin and crypto in general. According to the analyst, only the short squeezes could lift the bitcoin price to $ 50,000.
We are not yet at that level all time high from 2021, but we are slowly returning to the rates of yesteryear. In that respect, it is still too early to speak of a new bull market, but sentiment is in any case starting to turn in the right direction.