Fed’s Liquidity Move Averts Crypto Crisis: Raoul Pal

Raoul Pal, CEO of Real Vision, warns of a potential funding crisis as U.S. liquidity management shifts, impacting crypto and financial markets, evident in recent asset price changes.

Liquidity issues at the Federal Reserve and Treasury influence crypto markets, aligning fiscal policy with bank lending strategies to boost public benefits while delaying asset inflation.

Fed’s Potential Role in Averting Crypto Market Turmoil

Raoul Pal, the CEO of Real Vision, noted this week’s possibility of the Federal Reserve intervening to address a potential liquidity crisis impacting the crypto market. The situation reflects underlying systemic risks within market liquidity.

Policymakers are focusing on managing liquidity by controlling bank lending and fiscal channels, rather than relying on traditional quantitative easing. Fiscal policy alignment aims to stimulate broader public access while maintaining Wall Street’s benefits from currency devaluation.

Raoul Pal shared his perspectives on potential systemic crises in a recent discussion, noting, “The cryptocurrency market has liquidated all the greedy and is now targeting those who remain hopeful. The spice (liquidity) must flow.”

Market reactions suggest anticipation of these liquidity measures, with concerns about the impact on crypto prices. Pal’s insights indicate a possible repeat of the 2018/19 funding crisis scenario if interventions are unsuccessful.

Bitcoin’s Decline and Historical Parallels with 2018/19 Crisis

Did you know? Raoul Pal likens current liquidity issues to the 2018/19 crisis, where “plumbing failures” led to abrupt crypto downturns.

Bitcoin (BTC) currently trades at $94,981.72, with a market cap of $1.89 trillion and a market dominance of 58.83%, according to CoinMarketCap. The 24-hour trading volume stands at $73.78 billion, with a recent 0.86% decline. Over 30 days, Bitcoin experienced a 10.99% fall, reflecting ongoing market concerns.

Insights from the Coincu Research Team suggest that the Federal Reserve’s intervention might stabilize liquidity briefly, yet systemic financial challenges remain significant. A long-term solution requires aligning fiscal policies, impacting cryptocurrency liquidity and asset valuations.