A recent selloff wiped about $250 billion from the crypto market, but analyst Raoul Pal believes the cause lies in shrinking US dollar liquidity.
Pal, who heads Global Macro Investor, said on X that the downturn fits a pattern hitting several risk-sensitive investments at once.
He pushed back against claims that Bitcoin’s
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Pal explained that SaaS shares and Bitcoin behave similarly because they rely on expectations about future growth and adoption. Their value depends on the availability of money in the system and on borrowing costs.
When liquidity tightens and rates stay high, these assets tend to lose ground. He added that while many say “crypto is dead” or that “AI is taking over software”, these stories miss the bigger picture: both groups are reacting to the same economic pressure.
He stated, “The rally in gold essentially sucked all marginal liquidity out of the system that would have flowed into BTC and SaaS. There was not enough liquidity to support all these assets, so the riskiest got hit”.
Pal pointed to temporary strains in US funding channels as an added factor. Two government shutdowns and technical issues have limited short-term cash flow.
Recently, Arthur Hayes said Bitcoin could rise if the US Federal Reserve prints money to support Japan’s struggling bond market. How? Read the full story.
