After roughly $250 billion was wiped from the crypto market over a weekend, Global Macro Investor founder and CEO Raoul Pal pushed back on the idea that the cycle had broken. His view is that the drop was not caused by a structural failure inside crypto, but by a shortage of dollar liquidity. In his reading, the pressure came from a macro funding squeeze, and he said he remains extremely bullish on 2026.
Pal ties the selloff to macro liquidity, not crypto-specific weakness
Pal said the dominant narrative claims Bitcoin and the wider crypto market have already cracked. He rejected that framing. SaaS stocks, he noted, posted similar declines over the same period, and that kind of parallel weakness across very different assets points to a broader liquidity issue rather than a sector-specific breakdown. The move was sharp. His point is that the common driver sits above both markets.
He grouped Bitcoin and SaaS together as long-duration assets, meaning their valuations are highly sensitive to expectations about future cash flows or adoption. That makes them vulnerable when liquidity tightens and rate conditions shift. Pal also argued that gold has been drawing in the marginal liquidity that might otherwise have gone into Bitcoin and SaaS, leaving higher-risk assets exposed when capital is not deep enough to support everything at once.
With RRP depleted, TGA rebuilding becomes direct liquidity drain
Pal said the temporary liquidity shortage in the US has been made worse by two government shutdowns and what he described as problems in America’s financial plumbing. He added that the Federal Reserve’s Reverse Repo Facility, or RRP, was largely exhausted in 2024. In earlier periods, when the US Treasury rebuilt its TGA, the hit to liquidity could be partly offset by continued drawdowns in the RRP. That cushion is no longer there.
In practical terms, his argument is that TGA rebuilding now acts as a straightforward drain on market liquidity. That, he said, is the core reason crypto has been under pressure: not because fundamentals suddenly collapsed, but because fewer dollars are available for risk assets.
He dismisses fears around Kevin Warsh’s policy stance
Pal also pushed back on another explanation circulating in the market. BTSE Chief Operating Officer Jeff Mei told Cointelegraph that part of the decline came from investor concern over Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair. The concern, according to Mei, is that Warsh’s tough stance on inflation and quantitative easing could slow the pace of rate cuts.
Pal disagreed. He argued that Warsh’s role would be closer to running a Greenspan-era script: cut rates while keeping the economy moving at high speed, with AI-driven productivity helping to contain inflation. Pal’s wording was blunt. Warsh will cut rates, then do little else, while Trump and Treasury Secretary Bessent manage liquidity through the banking system.
Still highly bullish on 2026
Even after the latest drawdown, Pal kept an optimistic stance. He said the current phase of liquidity drainage is close to ending, and while each step cannot be forecast precisely, the broader policy picture is becoming clearer. Based on how he reads the Trump-Bessent-Warsh setup, Pal said he remains a “super bull” on 2026.
Under that framework, the recent crypto drop looks less like the end of the cycle and more like a painful transition caused by tightening liquidity.