Global Macro Investor CEO Raoul Pal has presented a bullish analysis predicting a massive liquidity flood that could reignite cryptocurrency and other risk assets. In his commentary, Pal describes this impending phase as 'The Road to Valhalla', where global liquidity expansion will follow the current tightening cycle, with crypto positioned to benefit the most.
Currently, markets are facing a liquidity crunch exacerbated by the ongoing U.S. government shutdown. The Treasury General Account (TGA) is accumulating funds with limited spending outlets, while the Reverse Repo Facility (RRP) is nearly depleted. Combined with the Federal Reserve's quantitative tightening (QT), this has created a temporary liquidity vacuum, disproportionately affecting risk-sensitive assets like cryptocurrencies.
Pal emphasized that the rolling of approximately $10 trillion in U.S. government debt over the next year is the dominant macro driver for all asset prices. Despite widespread investor fear, he argues that this debt roll, rather than panic, will define the next twelve months.
Once the shutdown concludes, a series of catalysts could rapidly reverse the liquidity cycle. The U.S. Treasury is expected to inject $250–$350 billion into the economy over several months as deferred spending resumes. Quantitative tightening will likely pause, and a weaker U.S. Dollar may emerge from renewed capital flows. Further rate cuts are anticipated due to post-shutdown economic weakness, while reforms to the Supplementary Leverage Ratio (SLR) could free up bank balance sheets. The passage of the CLARITY Act may provide regulatory clarity for cryptocurrencies, and global stimulus from China and Japan is expected to add to liquidity.
Collectively, these factors could unleash one of the largest liquidity waves since 2020, potentially propelling Bitcoin and Ethereum to new highs. Pal's GMI Liquidity Index has rebounded to $135 trillion in 2025 and is projected to reach $160–$170 trillion by 2026 if monetary easing resumes. He cautions that current market drawdowns are part of a bull market correction, termed the 'Window of Pain', advising investors to endure volatility for potential gains ahead.
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