Bitcoin Tracks Global Liquidity Says Raoul Pal: Nothing Is Broken
Macro investor Raoul Pal has been vocal about his perspective on Bitcoin's (BTC) behavior. In a recent X post, he stated that Bitcoin and the Nasdaq Composite are driven by global liquidity rather than day-to-day narratives of earnings or news.
According to Pal, Bitcoin is highly correlated with global liquidity at 87%, while the Nasdaq Composite has an even higher correlation at 97%. This means that these assets are not primarily trading on their own merits but are instead influenced by the amount of money in the system.
Pal also described Bitcoin as a 'young, volatile, emotional' asset that amplifies liquidity moves. He emphasized that this is normal behavior for the cryptocurrency and that it's currently running cold due to low liquidity. Pal reassured his followers that nothing is broken and that Bitcoin is doing exactly what it always does.
Pal tied Bitcoin's prospects to global liquidity, which he believes is driven by currency debasement and expanding government debt. He argued that this can be projected years ahead because interest payments on existing government debt are already known and tend to lead liquidity by roughly three years.