The founder of Real Vision, Raoul Pal, thinks that Ethereum might be due for another price correction before it can once again align with macro conditions.
The former Goldman Sachs executive says that the general feeling is ETH will drop back down to a new low or retest its recent one.
Ethereum is likely to move opposite the sentiment of investors and traders, according to Pal.
"But my hunch is that the path of MAX PAIN is higher. Hedge funds are scrambling to buy calls just in case ETH breaks $1,800 to $2,000. They cannot afford not to participate.
Above this level, retail will start to be forced in, along with institutions. $2,200 to $2,300 is the key one for me… a break of that either happens pre-merge or post-merge. Once everyone has got back in, the market can correct sharply before rising again based on the macro."
ETH is currently trading at $1,645. The cryptocurrency has fallen almost 2% in the past 24 hours alone.
The Ethereum developers say that the transition to a new proof-of-stake system, The Merge, will happen on September 19th.
Pal also notes that crypto space is driven by the M2 money supply. This is an economic term that refers to the total amount of currency in circulation, plus near-money or highly liquid assets which can be easily converted into cash.
The macro guru asserts that Ethereum's bullish momentum against Bitcoin (ETH/BTC) is due to strong fundamental growth, which is being driven by the superior current network effects and network activity.
Pal concludes by reiterating that investors sitting on the sidelines will be primarily driven to participate once Ethereum gets going.