Former Goldman Sachs executive Raoul Pal predicts a Bitcoin $140,000 rally driven not by retail hype but by surging global liquidity. He argues Bitcoin trades at a deep discount to current liquidity conditions, setting up a violent repricing far sooner than markets expect. This isn’t pie-in-the-sky optimism; it’s rooted in macro signals that have preceded explosive moves in past cycles.
Pal’s thesis cuts through the noise: liquidity leads price, and the gaps between the two don’t close gradually. With Q1 2026 liquidity inflection points looming, Bitcoin could snap to $140,000, a 106% jump from recent levels. But lingering overhangs from past liquidations add caution to the setup.
Bitcoin’s Deep Discount to Global Liquidity
Raoul Pal sees Bitcoin undervalued against a backdrop of expanding liquidity, a misalignment that historically resolves with sharp upside. Markets often ignore these macro forces until they hit like a freight train. Pal’s analysis hinges on how liquidity injections from central banks and fiscal maneuvers create fertile ground for risk assets like Bitcoin.
The core issue is Bitcoin’s failure to track liquidity expansions seen in prior bull phases. Pal notes that when these gaps widen, prices don’t grind higher; they explode. This dynamic positions Bitcoin as a global liquidity sponge, absorbing excess money chasing yield.
Central to this is a potential Q1 2026 inflection where multiple forces converge, amplifying liquidity flows into crypto.
Bank Regulation Shifts and Treasury Flexibility
Adjustments to the Enhanced Supplementary Leverage Ratio (ESLR) could free up bank balance sheets to hold more government debt. Pal explains this gives the US Treasury room to monetize deficits without immediate constraints. It’s a subtle shift, but one that floods the system with liquidity, indirectly boosting assets like Bitcoin.
Historically, such regulatory tweaks have preceded liquidity surges that propelled Bitcoin higher. Banks absorbing debt means less pressure on yields, easier financial conditions, and more capital for high-beta plays. Pal’s view: this isn’t theory; it’s mechanics playing out in real time. Combine it with weakening dollar trends, and the case for a Bitcoin $140,000 rally strengthens. For related dollar impacts, see our analysis on yen intervention bitcoin impact.
China’s balance sheet expansion adds another layer, signaling easier global conditions. Investors dismissing these as background noise risk missing the setup.
Treasury General Account Drawdowns
The Treasury General Account (TGA) drawdown is a liquidity catalyst Pal flags as accelerating. When TGA levels drop, cash floods back into markets, often sparking rallies in risk assets. Past cycles show this process supercharges Bitcoin’s upside.
Current dynamics suggest faster-than-expected drainage, aligning with Pal’s timeline. This isn’t isolated; it syncs with broader fiscal stimulus and tax incentives boosting capex. Bitcoin, sensitive to these flows, stands to benefit disproportionately.
Layer in fiscal measures like data center investments, and the liquidity picture turns bullish. Check our coverage of US jobs data bitcoin risks for contrasting views on macro pressures.
Business Cycle Signals Backing the Rally
Forward indicators like the ISM manufacturing PMI point to strengthening growth, lagging financial conditions by nine months. Pal ties this to global liquidity trends, creating a confirmatory backdrop for Bitcoin. If growth picks up amid liquidity floods, high-beta assets thrive.
These aren’t vague hopes; Pal tracks specific drivers like fiscal stimulus and infrastructure spending. The result? Rising confidence, easier lending, and capital rotating into crypto. Bitcoin’s history in such environments supports Pal’s Bitcoin $140,000 rally call.
Yet markets remain skeptical, pricing in slowdowns instead. This disconnect echoes past mispricings resolved by rapid repricing.
Fiscal and Tax Incentives Driving Capex
Fiscal stimulus and tax breaks for fixed asset investments are set to spur capex in energy and data centers. These sectors, crypto-adjacent, signal broader growth. Pal argues this feeds into ISM strength, lifting sentiment for risk assets.
Data centers alone represent massive Bitcoin-aligned demand, from mining to AI infrastructure. With liquidity supportive, expect outperformance. Our report on bitcoin hashrate drop highlights mining vulnerabilities that could amplify upside if resolved.
Mortgage rate relief could further boost consumer spending, indirectly aiding crypto via risk-on flows.
ISM and Liquidity Lead Times
Financial conditions lead ISM by roughly nine months, with liquidity following. Current data suggests ISM rebounding this year, per Pal. This sequence has reliably boosted Bitcoin in past expansions.
Global liquidity tailwinds from China and a softer dollar reinforce the setup. Investors watching ETF inflows might miss these deeper signals. See bitcoin price targets ETF inflows for related insights.
The October Overhang Holding Bitcoin Back
Bitcoin’s lag despite bullish liquidity stems from the October 10 liquidation cascade, damaging market structure. Pal calls it a plumbing failure unique to crypto’s lack of safeguards. Forced deleveraging and API glitches amplified the drop beyond fundamentals.
Exchanges likely absorbed selling, unwinding later algorithmically. Add call-selling around $100,000, and upside stayed capped. Pal believes this overhang is fading, clearing the path for repricing.
Structural resistance at $100,000 combines psychology with yield strategies. Once eased, the stage sets for acceleration.
Liquidation Cascade Mechanics
The cascade featured no trade cancellations, unlike equities, leading to outsized pain. Market makers vanished amid disruptions, deepening the fall. Pal speculates exchanges backstopped liquidity, distorting recovery.
This event lingers in positioning, but with time, it’s dissipating. Compare to recent market dips in our piece on why is crypto market down today.
Options Expiry and Yield Pressure
Widespread $100,000 call-selling tied to yield products suppressed price. These strategies cluster around key levels, creating resistance. As they unwind, room opens for upside.
Pal sees cautious positioning as fuel once liquidity hits. Recent whale moves echo this; explore bitcoin whales exchange activity.
The Banana Zone Awaits
Pal’s Banana Zone describes the cycle’s final nonlinear phase, fueled by liquidity, growth, and inflows. Markets first digest volatility, clearing $100,000 resistance. With overhangs lifting, the setup aligns.
Liquidity leads, so by consensus time, the move is on. Global pressures could force more injections, with Bitcoin responding sharply. $140,000 becomes baseline if historical ties hold.
This isn’t hype; it’s pattern recognition from cycles past.
Nonlinear Repricing Dynamics
The Banana Zone features exponential moves as FOMO kicks in. Pal stresses pre-phase digestion of resistance. Current caution positions markets perfectly.
Bitcoin’s liquidity sensitivity amplifies this. For altcoin parallels, read michael van de poppe altcoin season.
Global Refinancing Catalysts
Refinancing needs may inject fresh liquidity, supercharging the rally. Bitcoin absorbs it fastest among peers. Pal’s models peg $140,000 as fair value.
What’s Next
Pal’s forecast hinges on liquidity closing the gap, but risks like quantum threats or policy shifts loom. Watch TGA, ISM, and dollar for confirmation. A Bitcoin $140,000 rally feels inevitable if macro aligns, but structural scars demand vigilance.
Markets may sleepwalk into it, underpricing the snap higher. Stay analytical amid the hype. For broader 2026 outlooks, see our HTX 2025 recap 2026 outlook.
