Bitcoin’s fall below the $100,000 mark has shaken market confidence, dragging the Fear & Greed Index down to 23, a sign of extreme fear. But while panic spreads, Global Macro Investor founder Raoul Pal sees it differently. He believes this dip could be the calm before a major surge in global liquidity that may reshape markets over the next year.
Global Liquidity Tightens Before the Flood
In a recent tweet post Pal explained that the recent government shutdown in the U.S. has triggered a sharp liquidity squeeze. With the Treasury General Account (TGA) building up cash and nowhere to spend it, liquidity has effectively been drained from the system.
The situation worsens because the Federal Reserve’s quantitative tightening (QT) is still in play, and the reverse repo facility, a key liquidity buffer, is already depleted. These combined forces have hurt markets, especially crypto, which relies heavily on liquidity.
Taditional finance managers have also suffered, underperforming their benchmarks, while tech stocks have held up slightly better thanks to steady 401(k) flows.
What Comes Next?
Once the shutdown ends, Pal expects a massive reversal,
- $250–350 billion in Treasury spending could flood the system.
- QT may end, expanding the Fed’s balance sheet again.
- The U.S. dollar could weaken as global money flows rise.
- Rate cuts may follow as economic data softens, while the CLARITY Act could finally bring regulatory confidence to crypto markets.
Pal also believes other global forces, like China expanding its balance sheet and Japan supporting the yen, will further boost liquidity.
Global Liquidity Surge Could Spark Crypto Rally
Further Pal’s data, the GMI Total Liquidity Index, a model tracking money flow across global markets, is approaching a critical uptrend that has historically fueled rallies in risk assets like stocks and crypto.
He calls liquidity “the only game in town,” explaining that the next 12 months will revolve around rolling out $10 trillion in global debt, which could inject fresh money into financial markets.
While most analysts focus on short-term price dips, Pal argues the real story lies in liquidity and its potential to drive the next bull market. As of now, Bitcoin is trading near $101,331, down 3% in the past 24 hours, bringing its market cap near to $2.02 trillion.
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