Here’s What Drove the Crypto Crash, According to Raoul Pal

Crypto markets are reacting to a broader macro squeeze rather than any sector-specific breakdown, according to Real Vision co-founder Raoul Pal. Pal argues the common denominator is tightening US liquidity, with capital rotating defensively into gold and cash-like assets.

Raoul Pal pointed to US dollar liquidity conditions as the primary force behind the recent selloff. Moreover, he notes that Bitcoin and SaaS equities are moving in near lockstep.

Moreover, both sit at the far end of the liquidity-sensitive risk spectrum. When dollar liquidity is abundant, capital flows into long-duration, growth-oriented assets like tech stocks and crypto.

Liquidity Tightening Is Hitting Crypto and Risk Assets

This correlation suggests the decline is not driven by crypto-specific fundamentals, regulatory pressure, or internal market stress.

Instead, the drawdown reflects a broader contraction in available liquidity as financial conditions tighten. Therefore, when liquidity dries up, highly liquid and speculative assets are often sold first.

Moreover, this dynamic might explain why crypto assets and growth equities are weakening simultaneously while capital flows into perceived safe havens.

Gold’s relative strength during the downturn reinforces this view. Indeed, as liquidity tightens, capital tends to migrate toward assets that benefit from defensive positioning.

What a Liquidity-Driven Selloff Means

If Pal’s assessment holds, crypto’s next major move will depend less on internal market developments and more on shifts in macro liquidity.

Historically, Bitcoin has performed best during periods of expanding global liquidity and easing financial conditions.

Therefore, a sustained improvement in US dollar liquidity could quickly change market dynamics. Allowing risk assets to stabilize and recover without requiring new narratives or catalysts.

Conversely, continued tightening would likely keep pressure on crypto prices, regardless of network activity or adoption trends.

Lastly, current price weakness may reflect a macro pause rather than a breakdown in crypto’s long-term outlook. For now, liquidity remains the dominant variable shaping market behavior.

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