Bitcoin’s (BTC) recent weakness and the parallel decline in high-growth technology stocks are being driven by a temporary withdrawal of U.S. liquidity rather than a collapse in fundamentals, according to Real Vision founder Raoul Pal, who argues that markets are misreading a short-term plumbing issue as a structural failure.
In a note published over the weekend, Pal pushed back against what he called a growing narrative that the crypto cycle is “over,” saying price action is being distorted by U.S. Treasury operations, government shutdowns, and a lack of available liquidity, factors that have disproportionately hit long-duration assets.
Bitcoin And SaaS Are Being Priced The Same Way
Pal said his analysis began after comparing Bitcoin’s chart with the UBS SaaS Index, where he found the two assets tracking each other closely despite operating in entirely different markets.
“SaaS and BTC are the exact same chart,” Pal wrote, arguing that both are being discounted for the same reason: they are highly sensitive to liquidity conditions.
According to Pal, the comparison undermines claims that crypto is underperforming due to internal issues such as exchange failures, regulatory pressure, or investor fatigue.
Instead, he said both asset classes are reacting to the same macro constraint.
U.S. Liquidity Has Become The Dominant Driver
Pal acknowledged that his team underestimated the role of U.S.-specific liquidity in the current phase of the cycle.
While global liquidity has historically shown the strongest correlation with Bitcoin and equities, he said domestic U.S. liquidity has taken precedence due to a unique combination of factors.
These include the exhaustion of the Federal Reserve’s reverse repo facility, a rebuild of the Treasury General Account, repeated government shutdowns, and a strong rally in gold that absorbed marginal liquidity.
“The rally in gold essentially sucked all marginal liquidity out of the system that would have flowed into BTC and SaaS,” Pal wrote.
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That sequence, he said, created what he described as an “air pocket” in risk assets, a condition marked by sharp price declines without a clear fundamental trigger.
A Temporary Constraint, Not A Structural Shift
Pal said the current shutdown and Treasury dynamics represent the final hurdle before liquidity conditions improve, noting that resolution could come within days rather than months.
He pointed to a combination of expected policy developments, including rate cuts, bank balance sheet relief, fiscal spending, and regulatory adjustments, that he believes will restore liquidity ahead of the 2026 mid-term election cycle.
“Often in full-cycle trades, time matters more than price,” Pal wrote, urging investors to avoid interpreting short-term volatility as a signal that the broader cycle has ended.
Why The Market Reaction Matters
The broader implication of Pal’s note is that investors may be mispricing risk by treating liquidity stress as permanent damage.
If liquidity conditions ease as expected, assets that have been discounted most heavily, including Bitcoin and smaller crypto tokens, could rebound faster than markets currently anticipate.
Pal also rejected claims that prospective Federal Reserve leadership would restrict liquidity, calling the idea that Kevin Warsh would pursue a hawkish agenda a “false narrative” and suggesting policy would instead favor growth and financial system stability.
The message, he said, is not about short-term price targets but about patience through a phase driven by mechanics rather than sentiment.
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