Raoul Pal Explains Why SOL And LUNA Are Following ETH 2016 Massive Rally
According to Raoul Pal the price patterns of smart contract platform Solana (SOL) and stablecoin-focused blockchain payment system Terra (LUNA) look very similar to the price trajectory of Ethereum back in 2016.
In recent interview the Real Vision CEO opines that due to the cyclical nature of network effects, Ethereum’s price movement is currently mimicking Bitcoin’s 2017 bull cycle.
“…Once I start discovering Metcalfe’s law, I start realizing that Ethereum is exactly following Bitcoin’s last cycle. And it’s like, oh, my God, this is spooky. I mean, I’ve got actually on my Bloomberg in real time, and it almost works, tick for tick. I’ve never seen anything like it. And that gives a cycle projection for Ethereum of $20,000. And again, I actually think it’s going to overshoot.”
Source: GMI/Bloomberg
Network effects refers to the phenomenon that the more users and participants a system has, the more valuable a product or service it is.
Pal said that he has applied the same way of thinking to Solana and Terra, projects that were launched after the 2017 bull market. According to the market analyst, both SOL and LUNA are “exactly following” Ethereum’s first bull cycle.
“But I thought, well, if my logic about Metcalfe’s Law is right, then these layer-1s that we’ll talk about later should also fit. And bizarrely, here’s the chart of Solana against Ethereum in the last cycle, when Ethereum was the darling, the new breakthrough. It’s exactly following. And the same is true of Terra. It’s exactly following.”
Source: GMI/Bloomberg
According to Pal, Bitcoin is following its own previous cycles of adoption, and expects BTC price movement for the rest of its bull cycle to be similar as it was in early rallies in 2013. Network effects are the main driver of the crypto markets for the time being, according to the macro guru.
“So as these different protocols get adoption, they’re all behaving in the same way. Well, Bitcoin is repeating its early cycle of massive adoption. So, for me this is super interesting. And again, I don’t expect these to be perfect but they’re contextualizing network adoption, which is I think everything in this space for the time being, until we start moving into some of the other things.”
