Crypto market may face $60b liquidity crunch, says Investment strategist Raoul Pal

The much-awaited IPO of Coinbase could move institutional and retail investors away from cryptocurrencies and may lead to a short-term peak in their prices causing the markets to correct, according to the investment strategist
Bitcoin liquidity crunch
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Global Macro Investor CEO Raoul Pal is of the opinion that the upcoming Coinbase IPO would soak about $60 billion and result in a short-term topping of cryptocurrency prices, as institutional investors look to make use of the listing of the digital currency exchange to shore up their cryptocurrency portfolio.

In a series of tweets on Friday, the investment strategist opined that since it is difficult to buy cryptocurrencies, fund managers would find it easier to have cryptocurrency exposure by rather buying shares of Coinbase. 

This according to Pal makes more sense, as institutional and retail investors would not have to ‘fear, uncertainty and doubt (FUD)’ about creating new cryptocurrency accounts, or of possible hacks.

Liquidity concerns

Pal thinks that such a move by institutional investors could absorb as much as $60 billion worth of future investments away from Bitcoin, thus slowing institutional buying and may cause cryptocurrency markets to correct.

While the exact valuation and date of the planned Coinbase listing is yet to be known, there are other concerns that may result in cryptocurrency prices to fall in the meantime, including reduction of the quantitative easing measures taken up by nations in light of the Covid-19 pandemic waning.

But according to Hashed CEO Kim Seo-joon, even if the U.S. Fed stalls quantitative easing, the price of bitcoin will likely rise, as the blockchain ecosystem on which the cryptocurrencies are based will grow day by day and widen.

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