Global Liquidity Points to Crypto Recovery, Raoul Pal Says

TLDR:

• Global Liquidity holds a 90% correlation to Bitcoin and 97% to the Nasdaq since 2012, per Raoul Pal
• US Total Liquidity bottomed three months ago and is now accelerating, a bullish signal for crypto markets
• Stablecoin issuance grew 50% last year with transaction volumes now running in the trillions of dollars
• Weekly and daily DeMark indicators are aligning to signal a full crypto trend reversal within two weeks
  

Global Liquidity remains the most dominant macro factor in crypto markets, according to GMI founder Raoul Pal. Amid growing bearish sentiment, Pal pushed back in a detailed social media post.

Despite the fear gripping crypto traders, he cited a broad range of converging macro signals. His analysis draws on over a decade of macro and on-chain data. It covers Bitcoin correlations, business cycles, regulatory trends, and technical chart indicators.

Liquidity Conditions Continue to Support a Market Recovery

Pal noted that Global Liquidity has a 90% correlation to Bitcoin and a 97% correlation to the Nasdaq since 2012. The metric is currently growing at around 10% annually with no signs of slowing. GMI financial conditions, which lead Global Liquidity by six months, remain in an easing trend.

US Total Liquidity created a brief air pocket following the government shutdown. That metric bottomed three months ago and is now accelerating its recovery.

Since US Total Liquidity leads the crypto market by about three months, the timing aligns well. The recovery in this metric supports near-term price strength in digital assets.

The business cycle is also accelerating, which drives corporate earnings and broader risk appetite. China is expanding its balance sheet, adding further to the global liquidity picture.

The eSLR mechanism allows US banks to expand credit and absorb treasury issuance. These combined forces reinforce the overall liquidity environment.

Additional US rate cuts would boost disposable income and increase risk-taking behavior. Tax refunds landing on bank balance sheets add to credit creation capacity.

Together, these factors build a stronger foundation for liquidity-driven market gains. Pal sees these as converging tailwinds, not isolated developments.

Regulation, Stablecoins, and Technicals Align for a Reversal

In the same post, Pal pointed to the CLARITY Act as a near-term catalyst for institutional flows. The bill would allow banks and asset managers to engage directly with blockchain technology.

A large wave of institutional capital is reportedly waiting on this regulatory clarity. If passed, the legislation could unlock substantial new demand for digital assets.

Stablecoin issuance grew by 50% last year and continues to accelerate. Transaction volumes are now running in the trillions of dollars and still climbing.

The current US administration is widely regarded as the most crypto-supportive in history. These structural tailwinds support a broader and more sustained adoption trend.

On the technical side, weekly DeMark indicators are expected to form a solid base within two weeks. Daily DeMark setups are also stacking up in a favorable direction.

Any further weakness would likely complete both the daily and weekly signals. This would indicate full trend reversal potential, according to Pal.

The main risk Pal flagged is how long elevated oil prices persist. The next two weeks are the critical window for market direction.

If conditions align as expected, Pal anticipates a positive outcome for crypto prices. Markets remain gripped by fear, but the macro data points clearly higher.

The post Global Liquidity Points to Crypto Recovery, Raoul Pal Says appeared first on Blockonomi.