Key Takeaways:
- Raoul Pal says that the Bitcoin’s price decrease reflects correctly the SaaS stocks, showing the problem in macro liquidity, instead of only crypto.
- The fall of liquidity in the U.S. stems from Treasury actions, the Govrenment shutdowns and gold price upward momentum that all have strong impacts on long-term assets.
- Paul evaluates that the liquidity pressure is about to end thanks to interest rate cut and fiscal easing expected in the coming time.
Bitcoin’s recent selloff has fueled claims that the crypto cycle is over. But according to Raoul Pal, founder and CEO of Global Macro Investor, that narrative misses the real driver behind the price action.
Bitcoin and SaaS Are Telling the Same Story
Pal says the idea that “BTC is broken” falls apart when compared with other risk assets. In a recent post, he highlighted that Bitcoin and SaaS equities are tracking the same chart. Despite operating in completely different sectors, both have sold off in near lockstep.
The reason, Pal argues, is duration. Bitcoin and SaaS stocks are long-term investments, which implies that their price will largely rely on the future development. These assets are first discounted when liquidity tightens.
This trend does not support arguments that it is crypto-specific events or sentiment that is a culprit. Other unrelated growth assets would not be falling so much in case Bitcoin weakness would be in isolation. Instead, the synchronized move points to a shared macro factor.
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U.S. Liquidity Drain Hits Risk Assets
According to Pal, the missing variable is U.S. liquidity. In the last one year, the liquidity situation became tight because there was a chain of intersecting factors. Federal Reserve reverse repo facility was significantly exhausted in 2024 and eliminated a buffer that used to balance Treasury cash management.
At the same time, the U.S. Treasury rebuilt its General Account without that offset, creating a direct liquidity drain. Two government shutdowns compounded the issue, further restricting cash flow into markets.
Gold’s strong rally added pressure. Pal said gold absorbed marginal liquidity that might otherwise have flowed into Bitcoin or growth equities. Capital moved to areas that seemed safe and riskier assets were left open due to the low liquidity on hand.
The outcome has been acute and incessant downside throughout Bitcoin, SaaS stocks, and other long-term trades.
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Fed Narratives and Rate Cut Expectations
Pal also opposed fears of postponed rate cuts by the new leadership of the Fed. He dismissed claims that Kevin Warsh would act as a hawk, arguing that Warsh is aligned with a playbook focused on easing policy while allowing the economy to run hot.
In Pal’s view, rate cuts, fiscal stimulus, and regulatory changes tied to bank liquidity are still on the table. He expects these measures to restore liquidity through the banking system rather than through aggressive balance sheet expansion.
Crucially, Pal believes the current U.S. government shutdown represents the final major liquidity hurdle. Once resolved, the conditions that suppressed risk assets should ease.