**Bitcoin’s Dip Below $100,000 Triggers Extreme Fear, But Expert Sees Opportunity Ahead**
Bitcoin’s recent fall below the $100,000 mark has rattled market confidence, pushing the Fear & Greed Index down to 23—a clear signal of extreme fear among investors. Despite the prevailing panic, Raoul Pal, founder of Global Macro Investor, offers a more optimistic perspective. He believes this downturn could be the calm before a significant surge in global liquidity, potentially reshaping markets over the coming year.
### Global Liquidity Tightens Before the Flood
In a recent tweet, Pal explained that the U.S. government shutdown has triggered a sharp liquidity squeeze. With the Treasury General Account (TGA) accumulating cash and limited spending avenues, liquidity has effectively been drained from the financial system.
The situation is further complicated by the Federal Reserve’s ongoing quantitative tightening (QT) and the depletion of the reverse repo facility, which traditionally acts as a crucial liquidity buffer. These combined pressures have negatively impacted markets, especially cryptocurrencies, which depend heavily on ample liquidity.
Traditional finance managers have also faced challenges, underperforming compared to their benchmarks. However, tech stocks have fared slightly better, buoyed by consistent 401(k) cash flows.
### What Comes Next?
Pal anticipates a strong reversal once the government shutdown concludes. He forecasts that $250-350 billion in Treasury spending could soon flood the financial system, potentially ending QT and causing the Federal Reserve’s balance sheet to expand again.
Additional factors expected to influence the market include:
– A weakening U.S. dollar as global capital flows increase.
– Potential interest rate cuts if economic data softens.
– The CLARITY Act, which could finally bring regulatory certainty to cryptocurrency markets.
Moreover, Pal highlights global forces such as China expanding its balance sheet and Japan’s efforts to support the yen, both of which are poised to further boost global liquidity.
### Global Liquidity Surge Could Spark a Crypto Rally
Pal’s proprietary GMI Total Liquidity Index—a model that tracks money flows across global markets—is nearing a critical uptrend. Historically, such trends have fueled rallies in risk assets, including stocks and cryptocurrencies.
Referring to liquidity as “the only game in town,” Pal emphasizes that the next 12 months will be defined by the rollout of approximately $10 trillion in global debt issuance. This massive injection of capital could revitalize financial markets and set the stage for the next bull market.
While many analysts remain focused on short-term price fluctuations, Pal argues that liquidity dynamics hold the key to understanding the bigger picture.
### Current Market Snapshot
As of now, Bitcoin is trading near $101,331, down 3% in the past 24 hours. Its market capitalization hovers around $2.02 trillion.
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*Stay tuned as we monitor how these liquidity shifts could influence Bitcoin and the broader financial landscape in the months ahead.*
https://coinpedia.org/news/bitcoin-drops-below-100k-raoul-pal-says-liquidity-flood-will-spark-crypto-rally/