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. 

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 Many commentators have labeled Warsh as hawkish based on outdated statements from 18 years ago.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.

https://t.co/M5mLAi3XLA

— Raoul Pal (@RaoulGMI) February 1, 2026

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.