Raoul Pal: Global liquidity is highly correlated with BTC, and the market is at a historically oversold level

ChainCatcher reported that Raoul Pal posted on X, stating that although many people feel frustrated with cryptocurrencies and pure technologists believe the market is over, he disagrees. Global liquidity is the most important macro factor in history, with a 90% correlation to BTC since 2012 and a 97% correlation to NDX. Its annual growth rate is about 10%, with no signs of slowing down.

GMI financial conditions lead global liquidity by about 6 months and remain in an easing phase. Overall U.S. liquidity was suppressed during the shutdown, entering a bearish range. This indicator leads cryptocurrencies by about 3 months and has been accelerating upward since the low point three months ago. The business cycle is a key driver of returns and risk, and it is currently accelerating.

eSLR is a mechanism by which banks enhance liquidity through credit and absorbing government bond issuance. This liquidity is also rising and will accelerate further. Tax refunds enter bank balance sheets, increasing the propensity for credit creation, thereby boosting liquidity. The U.S. will further cut interest rates, increasing disposable income and thus risk appetite.

The CLARITY Act is expected to pass, driving capital inflows. Many banks and asset management institutions wish to use this technology, and this act will address that. Stablecoins are accelerating in development, with issuance growing by 50% last year and still accelerating. Trading volume has reached trillions of dollars and continues to rise.

U.S. government support for cryptocurrencies is at a historic high. Ultimately, agencies will be put in place one after another, greatly accelerating market development and creating an entirely new total addressable market. The crypto market remains in a state of panic, and by most indicators, is at the most oversold stage in history.