Macro investor Raoul Pal says Bitcoin (CRYPTO: BTC) can reignite its bull run thanks to up to $8 trillion in liquidity hitting the financial markets in the next 12 months.
Why 2025 Failed Despite Perfect Setup
Pal said in an interview with Scott Melker that 2025 was supposed to be a bullish year as institutions showed up and adoption exploded.
Yet, prices stalled, liquidity vanished, and crypto became the “really uncool kids at the party.”
The culprit was liquidity, not narratives.
In July, the Treasury started rebuilding the general account by $700 billion while draining the reverse repo facility, which pulled the rug from crypto as the furthest asset out the risk curve.
The government shutdown in December then delivered the final blow, followed by tariff threats with China.
Pal says liquidity explains 90% of all price action — everything else is noise.
Trump Administration Will Print $8 Trillion
Pal’s math is straightforward: the U.S. needs to create $7-8 trillion in liquidity over the next 12 months just to pay interest on existing debt.
Pal breaks down the liquidity sources: the SLR changes bring $3-4 trillion alone.
Fiscal stimulus adds another $1.5 trillion. Balance sheet rebuilding and TGA drawdown add another $1 trillion, putting the total at $5.5 trillion.
If they eliminate all risk weighting, the number immediately hits $8 trillion.
Pal says 2026 is critical for the Trump administration to win the midterm elections, so they’ll do anything to keep the economy strong.
No tax on tips, which affects millions of service workers, will likely happen sooner to filter money into the economy.
The administration is openly discussing fiscal dominance — a polite term for currency debasement.
Smart Contract Land Is Where The Action Happens
Pal also warned that Bitcoin holders watching Wall Street announcements haven’t figured out that the real action is about to happen in smart contract land, not pristine collateral land.
The DTCC said by the end of 2026, they’ll be tokenizing every security on the planet.
Every time an equity gets tokenized, it creates blockspace demand, which drives the value of the token network.
Institutions in the Middle East all have Bitcoin exposure but are wildly underweight smart contracts.
Once they realize the narrative shift, demand for Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), and other layer-ones will explode.
Raoul Pal says altcoins usually take off when the ISM turns positive, and with 2026 pointing to stronger growth, the upside phase tends to arrive fast after deep corrections.
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