According to former Goldman Sachs executive and macro investor Raoul Pal, the answer depends less on sentiment and more on liquidity.
Raoul Pal says signals are beginning to align in a way that historically precedes explosive upside moves.
Raoul Pal argues that Bitcoin is currently trading at a “deep discount” to global liquidity conditions. In previous cycles, similar gaps between liquidity expansion and price have not been resolved gradually. They have closed violently.
“If that gap closes,” he suggests, Bitcoin does not grind higher — it snaps into a higher range.
At the center of Pal’s thesis is a potential liquidity inflection point in Q1 2026. Several macro forces are converging at once.
First, changes to bank regulations, particularly adjustments to the Enhanced Supplementary Leverage Ratio (ESLR). According to Pal, this may allow banks to absorb more government debt without constraining their balance sheets.
That effectively gives the US Treasury greater flexibility to monetize deficits, increasing system-wide liquidity.
Second, Treasury General Account (TGA) dynamics are in focus. Historically, when the TGA is drawn down, liquidity quickly flows back into markets. Pal believes that the process is likely to accelerate.
Layer on a weakening US dollar, often a signal of easier financial conditions, and expanding liquidity from China’s balance sheet, and the backdrop becomes more supportive for risk assets.
According to Pal, liquidity is already improving faster than markets are pricing in. His rough estimate? If Bitcoin were to realign with prevailing liquidity conditions, the price would be closer to $140,000.
“…[based on liquidity models, Bitcoin] should be closer to $140,000 [if historical relationships hold],” he said.
A move to $140,000 would represent a 106% increase in Bitcoin’s price from current levels.
Pal also points to forward-looking indicators tied to the business cycle, particularly the Institute for Supply Management (ISM). In his framework, financial conditions lead ISM by roughly nine months, with global liquidity following shortly after.
The data he tracks suggests ISM could strengthen meaningfully this year, signaling an improving growth environment. These data, listed below, could all contribute to rising confidence and lending activity.
If growth expectations rise while liquidity expands, Bitcoin and other high-beta assets have historically outperformed.
Yet despite these improving conditions, Bitcoin has lagged. Pal traces that disconnect to the October 10 liquidation cascade, a structural event he believes damaged market plumbing.
Unlike traditional equity flash crashes, crypto lacks regulatory safeguards to cancel trades. During the cascade, forced deleveraging coincided with exchange API disruptions, temporarily removing market makers and liquidity providers. Prices fell further than fundamentals justified.
Pal speculates that exchanges may have stepped in to absorb forced selling, later unwinding positions algorithmically during peak liquidity hours.
Combined with widespread call-selling strategies clustered around the $100,000 strike, often tied to yield products, the result was sustained upside suppression.
However, he believes that the overhang is now fading.
Pal refers to the final acceleration phase of a crypto cycle as the “Banana Zone” — a nonlinear repricing driven by liquidity, improving growth, and renewed capital inflows.
Before that phase begins, markets typically digest prior volatility and clear structural resistance levels. The $100,000 zone, he argues, is both psychological and structural. Once call-selling pressure eases and positioning remains cautious, the setup for an upside shock strengthens.
Liquidity, in Pal’s view, leads price. By the time consensus turns bullish, the move may already be underway.
If global refinancing pressures force further liquidity injections into the system, Bitcoin, which he describes as a “global liquidity sponge,” could respond quickly.
And if the gap between liquidity and price closes, $140,000 may not be a stretch target. It may simply be where the market was always headed.
– Ex-Goldman Sachs Insider Forecasts $140,000 Bitcoin Rally — Here’s Why appeared first on BeInCrypto.
