Raoul Pal: Global Liquidity Highly Correlated with BTC, Market at Historically Oversold Levels

Odaily reported that Raoul Pal stated on platform X that despite widespread frustration with cryptocurrencies and purely technical analysts believing the market is over, he disagrees. Global liquidity is the most critical macro factor historically, showing a 90% correlation with BTC since 2012 and a 97% correlation with NDX. Its annual growth rate is approximately 10% with no signs of slowing down. The GMI financial conditions lead global liquidity by about 6 months and are still in an easing phase. Overall US liquidity was suppressed during the shutdown, becoming a bearish zone. This indicator leads cryptocurrencies by about 3 months and has begun accelerating upward from its low point three months ago. The business cycle is a key driver of returns and risk and is showing an accelerating trend. eSLR is a mechanism for banks to enhance liquidity through credit and absorbing treasury issuance. This liquidity is also rising and will further accelerate. Tax refunds entering bank balance sheets increase the propensity for credit creation, thereby boosting liquidity.

The US will further cut interest rates, increasing disposable income and subsequently raising risk appetite. The CLARITY Act is expected to pass, driving fund inflows. Numerous banks and asset management institutions wish to utilize this technology, and this act will address that. Stablecoins are accelerating their development, with issuance growing 50% last year and still accelerating. Trading volume has reached trillions of dollars and continues to rise. US government support for cryptocurrencies is at its highest level historically. Ultimately, agencies will be established one after another, greatly accelerating market development and forming a completely new total addressable market. The crypto market remains in a state of panic, showing as the most oversold stage in history according to most indicators. The weekly DeMark indicator will provide very solid support in two weeks (this indicator is now officially available on Trading View). The daily DeMark indicator is also showing a stacked pattern. Any weakness appearing from now on will complete the daily and weekly indicators, suggesting the potential for a full trend reversal. The risk factor is how long oil prices remain high. The next two weeks are a critical period to watch. He believes the aforementioned factors will yield positive results. Further upside is expected.