Raoul Pal on Bitcoin Nasdaq liquidity
by Freddenver: Bitcoin
It is the scarcity of speculative capital that has forced funding into a single lane, leaving everything else dry. Raoul Pal points out that Bitcoin simply does not carry the same attributes found in the Nasdaq right now because the liquidity spigots have been stuck. Growth in the US has happened, sure, but it hasn't been strong enough to generate actual excess capital when you measure it against GDP. In fact, looking at the numbers, excess liquidity relative to GDP growth has been barely positive or even negative most of the time. When you don't have more speculative money floating around, you only have one thing to fund, which is AI projects, and there was not enough capital for anything else. The result is that AI investment activity has paused and cryptocurrency markets have declined because there is still not excess liquidity around to support them. We have had a bloody Iran war, a massive dollar rally, rates going up, and government shutdowns, all preventing full-force liquidity from entering the market. One thing after another has blocked the flow, so that is why liquidity hasn't been there in full force yet. Now we are seeing a market rotation underway as a consequence of these constraints. The next phase requires increased liquidity before any real growth can happen across the board. Once those spigots finally open up fully, the prediction is that everything can go up together.
Transcript (en)
So two things, obviously, 1010 broke something, right? Something happened within that that we never really found out. But after that, it was really a matter of liquidity was not enough. So liquidity has been growing in the US, but it hasn't been super strong. So if you look at excess liquidity, liquidity growth in excess of GDP growth, it's barely been positive. And most of the time it's been slightly negative, which means you don't have more speculative capital. So you had one thing to fund, which was the AI, and there wasn't enough capital for anything else. So now what we've seen is AI has paused and crypto's gone because there's still not excess liquidity around. So once you get all the liquidity spigots open, we've had a bloody Iran war. We've had the dollar rallying. We've had rates going up. We've had the government shutdowns. We've had one thing after another. So that's why liquidity has not been there in full force. So now we've got a rotation, but the next phase has to be more liquidity and then everything can go up.
