Raoul Pal analyzes the direction of the crypto market after the government shutdown ends: a flood of Liquidity is about to arrive.

Real Vision CEO Raoul Pal released his latest market outlook after the government shutdown ended, predicting that the U.S. Treasury General Account (TGA) will release massive liquidity, and the weakening dollar combined with balance sheet expansion may create a “liquidity flood.” Despite Bitcoin falling below the $100,000 mark after the shutdown ended, Pal remains optimistic about the mid-term prospects of the crypto market and expects the “Crypto Clarity Act” to accelerate its progress. Disagreements among Fed officials regarding interest rate cuts in December exacerbate market uncertainty, prompting investors to wait for policy signals from the FOMC meeting on December 10.

Liquidity Dynamics and Fiscal Spending Outlook

Raoul Pal's analysis on the X platform points out that the backlog of fiscal spending during the government shutdown will be concentrated and released after reopening, resulting in a significant liquidity injection. The U.S. Treasury General Account (TGA) held about $800 billion in balance before the shutdown, and these funds are planned to be injected into the economy, potentially reversing the recent tightening trend in financial conditions. Historical data shows that similar liquidity releases typically support risk assets.

From the perspective of monetary policy coordination, Pal expects the Fed to adopt temporary measures such as regular financing to alleviate year-end funding tightness, which could form what he calls a “Liquidity flood.” This judgment is consistent with the recent trend of declining usage of overnight reverse repurchase tools, indicating that the liquidity demand in the banking system is rebounding. Goldman Sachs analysts estimate that approximately $300 billion in liquidity could be released within six weeks after the suspension ends, equivalent to a medium-sized quantitative easing.

Global Policy Coordination and Its Impact on the Crypto Market

Pal's analysis is not limited to the United States, but also covers the policy trends of major economies. He expects China to continue to promote balance sheet expansion, while Europe may add fiscal stimulus. This global tendency towards easing creates a favorable environment for risk assets such as encryption. Of particular interest is China's investment in digital renminbi and blockchain infrastructure, which may accelerate and provide indirect support for the crypto market.

Regarding the specific legislative progress in the crypto industry, Pal is optimistic that the “Crypto Clarity Act” will gain new momentum. The bill had already passed the House Financial Services Committee review before the standstill, aiming to provide clear regulatory classifications and compliance pathways for digital assets. Bipartisan cooperation on government shutdown solutions may create a fast track for such less contentious technical bills, eliminating the regulatory uncertainties that have plagued the industry for years.

Key Variables in the Market After the Stagnation Period

• TGA releases Liquidity: approximately $300 billion (estimated)
• Fed balance sheet: expected expansion
• December interest rate cut probability: 50% (significant divergence)
• The “Encryption Clarity Act”: Accelerating expected progress.
• Dollar Index: Bearish Trend
• Global Liquidity: Coordinated Expansion of China, the US, and Europe

Fed Policy Divergence and Market Pricing Dilemma

There are rare disagreements within the Fed regarding the interest rate decision in December, increasing market uncertainty. Fed Governor Stephen Miran supports a significant rate cut of 50 basis points, arguing that not continuing with easing is “short-sighted”; while San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari stated that no decision has been made yet, emphasizing that mixed economic signals complicate the judgment.

This policy uncertainty is reflected in the interest rate futures market, with the probability of a rate cut in December plummeting from 72% a week ago to 50%. The CME FedWatch tool shows that traders are now pricing in about a 50% probability of maintaining the status quo and a 50% probability of a 25 basis point cut, with the possibility of a significant cut being virtually eliminated. This indecision contrasts sharply with the decisiveness during the consecutive rate cuts in September and October, highlighting the impact of the data vacuum period on decision-makers.

Technical Aspects of the Crypto Market and Institutional Capital Flows

Despite the optimistic liquidity outlook, Bitcoin has still fallen below the psychological threshold of $100,000 after the government shutdown ended, indicating that a “sell the fact” sentiment is dominating short-term trading. Technical analysis shows that Bitcoin's key support level is at $93,000 (50% Fibonacci retracement), and if it fails to hold, it may drop to $88,000 (100-week moving average). This technical weakness is consistent with the flow of institutional funds, as Bitcoin spot ETFs have seen net outflows on 8 out of the past 11 trading days.

From the perspective of market structure, this adjustment may lay a healthy foundation for subsequent rises. The leverage ratio in the derivatives market has decreased by 15%, and the funding rate for perpetual contracts has returned to neutral, reducing the risk of a chain reaction from forced liquidations. At the same time, although long-term holders have recently reduced their holdings by 815,000 Bitcoins, the realized losses remain low, indicating that the selling behavior is more about profit-taking rather than panic selling, which is beneficial for market stability.

Liquidity Cycle and New Phase of the Crypto Market

Raoul Pal's “liquidity flood” prediction paints a macro picture of the crypto market facing at a special moment when the government shutdown ends. When fiscal spending restarts and central bank balance sheets expand again, cryptocurrencies may usher in a new round of liquidity-driven rallies. However, this optimistic outlook must overcome the obstacles of short-term technical weakness and the uncertainty of Fed policy. At this turning point in the liquidity cycle, the crypto market once again proves its deep connection with global capital flows—benefiting from an increase in risk appetite during times of ample liquidity, while also being the first to face the fleeing response during liquidity tightening. With the dust settling from the government shutdown, cryptocurrencies may be standing at the starting point of a new macro-driven rally.