Crypto Market Waits for Liquidity to Return
This week, traders are asking one big question: Is the crypto bull run still alive, and when will it come back?
Many macro analysts believe the current slowdown in crypto is mostly about liquidity — how much cash is flowing through the financial system — rather than just market sentiment. They say the turnaround depends on what happens with the U.S. Treasury’s cash balance, the Federal Reserve’s balance sheet, and when the U.S. government reopens after its shutdown.
Why Crypto Is Struggling
According to macro analyst @plur_daddy, the problem starts with shrinking liquidity.
He said, “We’re seeing less cash in the system, and that’s now hitting risky markets like Bitcoin and stocks.”
He explained that speculative sectors — such as quantum tech, nuclear, drones, and clean energy — are falling sharply, while money is moving into large, stable companies, especially those in AI and big tech.
The reason, he says, is that cash is being locked away in the U.S. Treasury General Account (TGA) while the Fed continues its quantitative tightening (QT) program, which reduces the amount of money circulating in banks. This has pushed bank reserves below the key $3 trillion level, creating pressure in financial markets.
He expects the situation to ease, but it will take time.
When Will Things Improve?
The analyst also mentioned that the U.S. dollar (DXY) is rising but nearing a resistance level at 101. He believes the Trump administration prefers a weaker dollar, which could help risk assets like crypto.
He outlines a possible timeline for recovery:
- Government reopening → marks the bottom for liquidity.
- Dec 1: QT begins to unwind.
- Dec 10: The Fed may take further supportive actions.
- Jan 1: The new fiscal plan (OBBBA) expands the deficit, adding more liquidity.
Despite recent selling, he says Bitcoin has remained strong. His personal plan: stay patient, hold cash, and buy BTC and select stocks once the government reopens.
Later, he noted that he had already bought some BTC, seeing signs that liquidity might be improving and that market sentiment had hit bottom.
Raoul Pal: It’s All About Liquidity
Macro expert Raoul Pal agrees — for him, everything comes down to global liquidity.
He wrote, “If global liquidity is the main driver of markets, we must focus on that. The only real challenge right now is how the world rolls over $10 trillion in debt. Everything else is secondary.”
He explains that the U.S. government shutdown makes things worse by holding back spending and increasing the TGA balance, while QT further drains money from the system. That’s why crypto — the most sensitive asset to liquidity — has been hit hardest.
Once the government reopens, he expects a reversal:
- The Treasury will spend $250–350 billion within months.
- QT will end, allowing the Fed’s balance sheet to expand again.
- The U.S. dollar will likely weaken, which usually supports crypto and stocks.
He also highlights future positive catalysts:
- New regulations like the CLARITY Act, giving crypto clearer legal status.
- Banking reforms (SLR changes) that allow more lending.
- A major fiscal bill (“Big Beautiful Bill”) to boost the economy before the elections.
- Global liquidity growth from China and Japan supporting risk assets.
Stay Calm During Volatility
Pal’s message for investors: Don’t panic.
Market drops like this are normal during bull markets — they test your patience. His advice is simple:
“Wait it out, and buy the dip if you can.”
His summary is short and clear:
“When liquidity goes up, everything else goes up.”
