Macro Guru Raoul Pal Warns Leveraging In '70 Vol Asset' Is A 'Ticket To Bankruptcy' Amid $1B Crypto Liquidations

Macro Guru Raoul Pal is offering some words of wisdom to cryptocurrency traders facing the sting of market liquidations. 

What Happened: In an X post, Pal addressed the disadvantages of using leverage when trading crypto. “You’ve gotta love crypto + leverage… you get liquidated, you get liquidated…you all get liquidated! What is wrong with people??! Leverage in a 70 vol asset is a ticket to bankruptcy. Ho hum. Spot and chill,” Pal advised.

Pal criticizes the risky practice of using high leverage when trading cryptocurrencies. He suggests that leveraging—borrowing funds to magnify trades—in a market where an asset’s value can swing drastically (70 volatility) often leads to ‘liquidation,’ where a trader’s position is automatically sold off to repay the loan, often resulting in significant losses or even bankruptcy.

His advice, “Spot and chill,” means investors should buy cryptocurrencies at their current market (“spot”) prices and hold them without employing leverage, favoring a less risky investment approach.

Over the course of the last 24 hours, a total of 296,493 traders encountered forced closures of their positions, leading to an aggregate loss amounting to $1.05 billion due to liquidations. 

The most significant of these liquidations occurred on the Bitmex trading platform with a single order involving the Bitcoin to USD pair (XBT-USD), valued at $9 million. 

Bitcoin BTC/USD long positions, where traders bet on a rise in price, saw liquidations of $215 million, and Ethereum ETH/USD longs experienced a similar fate with $134 million liquidated during the same period, data from CoinGlass shows.

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Why It Matters: Pal took to X on Sunday, stating, “My crypto timeline has gone from mid-curve debates about what is the superior blockchain technology to ‘it, f*ck it's a dog with a hat!'”

Earlier, in February, Pal predicted that Bitcoin could hit $250,000, Ethereum may rise to a range of $15,000 to $20,000, and Solana could see a rally between $750 and $1,000 in the span of the next year and a half.

Price Action: At the time of writing,  BTC was trading at $65,709 down 1.20% over the last 24 hours, according to Benzinga Pro.

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Photo by Matt Benzero on Shutterstock