The post Bitcoin Isn’t Broken, Liquidity Is: Raoul Pal Explains appeared on BitcoinEthereumNews.com. Bitcoin and SaaS declines are driven by US liquidity constraintsThe post Bitcoin Isn’t Broken, Liquidity Is: Raoul Pal Explains appeared on BitcoinEthereumNews.com. Bitcoin and SaaS declines are driven by US liquidity constraints

Bitcoin Isn’t Broken, Liquidity Is: Raoul Pal Explains

  • Bitcoin and SaaS declines are driven by US liquidity constraints, not broken markets.
  • Resolution of the US government shutdown could restore liquidity and ease market pressure.
  • Full-cycle investing favors patience; time matters more than short-term crypto price swings.

Macro investor Raoul Pal has dismissed claims that Bitcoin and crypto are fundamentally broken. In a detailed analysis shared over the weekend, Pal revealed a surprising connection between Bitcoin’s decline and SaaS stocks. 

The Real Vision founder addressed growing concerns about the current market downturn. His findings point to US liquidity issues rather than structural problems with digital assets.

US Liquidity Constraints Drive Market Decline

Pal discovered that Bitcoin and the UBS SaaS Index show nearly identical chart patterns. This revelation challenges the narrative that crypto has uniquely failed during this cycle.

The macro analyst explained that US liquidity has been constrained by two government shutdowns. 

Bitcoin and the UBS SaaS Index show nearly identical patterns, Source: X

Treasury General Account rebuilding in July and August created additional drains. The Reverse Repo facility essentially completed its drawdown in 2024, removing a crucial monetary offset.

“Those are both the longest duration assets that exist,” Pal noted regarding Bitcoin and SaaS stocks. Both asset classes faced discounting because liquidity was temporarily withdrawing from the system.

Gold Rally Absorbed Available Liquidity

The recent gold rally played a significant role in the liquidity crunch. According to Pal, gold essentially absorbed all marginal liquidity that would have flowed into Bitcoin and SaaS.

The market lacked sufficient liquidity to support all these assets simultaneously. Consequently, the riskiest assets took the hardest hits during this period.

Pal emphasized that the current government shutdown represents the final liquidity hurdle. Treasury hedged against this shutdown by not drawing down the TGA after the previous one.

Instead, officials added more to it, creating another liquidity drain.

Fed Policy Shifts Expected Under New Leadership

Pal addressed what he called false narratives about potential Fed Chair Kevin Warsh. Many commentators have labeled Warsh as hawkish based on outdated statements from 18 years ago.

The macro investor explained that Warsh’s mandate involves running the Greenspan-era playbook. This approach means cutting rates and letting the economy run hot. 

The strategy assumes AI productivity gains will keep core inflation subdued, similar to the 1995-2000 period.

“Warsh will cut rates and do nothing else,” Pal stated. He expects the incoming Fed chair to facilitate Trump and Treasury Secretary Bessent’s liquidity plans.

Recovery Timeline and Market Outlook

Pal acknowledged his team missed the shift from Global Total Liquidity to US Total Liquidity dominance. Typically, Global Total Liquidity shows the highest correlation to Bitcoin and tech stocks over full cycles.

However, US Total Liquidity currently drives market dynamics because America remains the key global liquidity provider. The confluence of events, Reverse Repo drain, TGA rebuild, shutdowns, and gold rally, created unforeseen impacts.

Once the current shutdown resolves, Pal expects several liquidity catalysts to activate. These include the eSLR reduction, partial TGA drain, fiscal stimulus, and rate cuts. Political considerations around mid-term elections should accelerate these moves.

The Real Vision founder noted that smaller tokens typically fall 70% when Bitcoin drops 30%. High-quality projects generally recover faster once liquidity conditions improve.

Pal maintained his bullish stance for 2026, citing confidence in the Trump-Bessent-Warsh policy framework. He stressed that patience matters more than short-term price action in full-cycle investing.

The macro analyst concluded by urging investors not to abandon positions during temporary air pockets. Market resolution depends more on time than price in complete cycle trades.

Source: https://www.livebitcoinnews.com/bitcoin-isnt-broken-liquidity-is-raoul-pal-explains/

Disclaimer: The articles reposted on this site are sourced from public platforms and are provided for informational purposes only. They do not necessarily reflect the views of MEXC. All rights remain with the original authors. If you believe any content infringes on third-party rights, please contact service@support.mexc.com for removal. MEXC makes no guarantees regarding the accuracy, completeness, or timeliness of the content and is not responsible for any actions taken based on the information provided. The content does not constitute financial, legal, or other professional advice, nor should it be considered a recommendation or endorsement by MEXC.

You May Also Like

XRP Ignites As Spot Volume Skyrockets

XRP Ignites As Spot Volume Skyrockets

XRP surprised this weekend with a sudden surge of +2,860% on its spot flows in barely eight hours. This historic peak, occurring in a quiet market, reignites speculation
Share
Coinstats2026/02/09 05:05
OpenVPP accused of falsely advertising cooperation with the US government; SEC commissioner clarifies no involvement

OpenVPP accused of falsely advertising cooperation with the US government; SEC commissioner clarifies no involvement

PANews reported on September 17th that on-chain sleuth ZachXBT tweeted that OpenVPP ( $OVPP ) announced this week that it was collaborating with the US government to advance energy tokenization. SEC Commissioner Hester Peirce subsequently responded, stating that the company does not collaborate with or endorse any private crypto projects. The OpenVPP team subsequently hid the response. Several crypto influencers have participated in promoting the project, and the accounts involved have been questioned as typical influencer accounts.
Share
PANews2025/09/17 23:58
Dogecoin (DOGE) and Shiba Inu (SHIB) Likely to Underperform as Capital Flows to New Token Set to Explode 19365%

Dogecoin (DOGE) and Shiba Inu (SHIB) Likely to Underperform as Capital Flows to New Token Set to Explode 19365%

The cryptocurrency market is entering a decisive phase, where legacy meme coins like Dogecoin and Shiba Inu continue to command recognition but may face diminishing returns compared to newer entrants. Capital flow data and presale activity suggest that investors are increasingly looking beyond the familiar names, with Little Pepe emerging as one of the most [...] The post Dogecoin (DOGE) and Shiba Inu (SHIB) Likely to Underperform as Capital Flows to New Token Set to Explode 19365% appeared first on Blockonomi.
Share
Blockonomi2025/09/18 04:00