Recent Crypto Market Was A Testament, But 'The System Didn't Break,' Says Global Macro Investor's Raoul Pal

The recent cryptocurrency market crash is a testament to its ecosystem's reliability, according to Raoul Pal, CEO of Global Macro Investor, a global macro advisory publication.

What Happened: Pal noted in a Tuesday Twitter thread that the cryptocurrency market crashed by "42% in 14 days, wiping out $1.02trn in value in an orgy of liquidation of people up to 100 x levered, with very low regulation. Many tokens fell up to 70%, including unregulated lending and borrowing biz."

He highlighted that all of that caused no damage to the crypto ecosystem.

"Crypto had a major, major VAR-shock test and NOTHING happened," Pal noted.

What Else: Pal pointed out that leverage liquidation was offset by over collateralization, no firm went under, the Federal Reserve did not need to step in and decentralized finance protocols carried their activity on near-normally.

There were no daisy chains of collateral losses.
There was no collateral pressure.
Stablecoins remained stable.
A few exchanges went down for an hour or two. No exchange big losses occurred, no need to mutualise losses either.
No protocol failed.
No firms needed rapid funding.

— Raoul Pal (@RaoulGMI) May 25, 2021

He continued, noting that stablecoins kept their value stable, there were no daisy chains of collateral losses, no collateral pressure, no protocol failed, no firms needed rapid funding, and no one had open-ended losses.

While he admitted that a few crypto exchanges went offline for an hour or two, no big losses occurred and concluded.

"The system didn't break. It offered zero systemic risk to the broader financial world. Speculators lost money and that is it."

Pal explained that this is the kind of potential that he saw in cryptocurrencies in 2012.

See also: Guggenheim CIO Calls Crypto 'Tulipmania' After Predicting Bitcoin Will Hit $600,000

This technology, he believes, allows for an "anti-fragile financial system that doesn't break in times of stress, where ownership of assets is clear and losses are not mutualised to tax payers.(sic)" 

"This was a big two weeks for crypto and for the future financial system," Pal concluded.