What It Means When The Crypto Market Is In The 'Banana Zone'

2024 was a great year for the crypto industry. From the approval of Bitcoin and Ethereum ETFs, to Donald Trump's endorsement and positive support of the industry, it's obvious that crypto has come a long way since the FTX Collapse and disastrous bear market of 2022. That being said, now that the first pro-crypto president has officially taken office and Bitcoin has blown past the $100,000 mark, it appears as though we are on the precipice of yet another year of insane upwards volatility for the crypto market. With all of the cards in order, and as 2025 has just barely gotten started, it sure feels like right now is nothing but the calm before the storm.

You see, if you look back at charts from previous cryptocurrency bull markets, you'll always see something of a slowly inclining line that leads up to an explosive upward shot, similar in shape to a hockey stick or a banana. Funnily enough, a macro-investor named Raoul Pal has actually come up with a name for this period: the banana zone. But what exactly is the banana zone, what does it mean for cryptocurrency markets, and better yet, how can we spot it before a parabolic surge occurs in the market? Let's take a closer look in order to find the answers.

Raoul Pal has grown to become one of the leading voices in the cryptocurrency space, guiding the investment decisions of many through his platform Real Vision of which he is the co-founder and CEO. Prior to this, he has over 30+ years of experience in the financial sector, having co-managed the GLG Global Macro Fund in London as well as the hedge fund sales business in Equities and Equity Derivatives in Europe for Goldman Sachs. That being said, outside of that he is nothing short of a veteran of the crypto industry, having first discovered and invested in bitcoin back in 2012,making him one of the earliest investors.

Regardless, it's safe to say that Raoul certainly knows his fair share about financial markets and investing. Initially he came up with the term "banana zone" to describe the stage of cryptocurrency bull markets stamped with explosive, exponential growth causing the price of different tokens to surge drastically upwards. In simple terms, the "banana zone" is that period of time in the market where token prices across the board start going bananas, and it feels like every day you're seeing headlines about random, everyday people becoming millionaires off of meme coins. However, while this term is intentionally designed to be funny, Raoul actually believes there's a lot of money to be made if you invest into cryptocurrency markets before it fully takes shape.

Raoul published an article last May on Linkedin that goes into extensive detail about what exactly the banana zone is, how markets reach that point, and more. It is basically the boiling point of his Everything Code thesis, which essentially posits that since 2008 markets have moved up and down like clockwork in four year cycles driven by global liquidity. These four year cycles are broken down categorically by season: winter, spring, summer, and fall, with the first two being the bear markets and summer and fall being bull markets. The banana zone, according to Raoul, falls some time between summer and fall, and he believes we are currently seeing the first phase of it.

Yes, just like Raoul's everything code thesis, the banana zone itself happens in phases as well. In a post on X, he broke down exactly what these phases are as well as which one we can currently find ourselves in. Phase 1 started during last year's post-election breakout, where we saw prices surge for about a month before they began consolidating around late December to mid January. Phase 2 is what Raoul likes to call the "Banana Singularity," otherwise known in crypto as Alt Season, where the price of every single token goes up drastically, followed by a longer consolidation phase. Finally, phase 3 is when the "core winners" (most successful cryptocurrencies) of the cycle explode to make much higher highs than the rest of the tokens.