Crypto On Alert: Raoul Pal Hints At Macro Twist Post-US Govt Shutdown

Overview

With the recent end of the US government shutdown, markets are turning their attention to macroeconomic factors that could influence liquidity. Raoul Pal has outlined a roadmap suggesting that upcoming shifts in government spending and Federal Reserve policies may have significant implications for the cryptocurrency market.

What Happened

Raoul Pal highlighted the reopening of the US government and its potential effects on liquidity in a post on X. He emphasized that spending from the Treasury General Account (TGA) is expected to begin shortly, which would lead to an increase in liquidity that could persist for several months. According to Pal, the end of quantitative tightening (QT) scheduled for December will contribute to a gradual increase in the balance sheet, potentially weakening the dollar.

Pal explained that TGA drawdowns would redirect cash back into bank reserves and money markets, reversing the liquidity drain that occurred during the government shutdown. He noted that the Federal Reserve has confirmed the end of QT on December 1, 2025, transitioning from a reduction of the balance sheet to full reinvestment of maturing Treasuries.

He pointed out that these changes could lead to more dollars circulating in funding markets, which he views as favorable for risk assets, including cryptocurrencies. However, he also cautioned about the risk of a year-end funding squeeze and suggested that temporary measures, such as term repo operations and the Standing Repo Facility (SRF), may be necessary to add liquidity.

Pal further discussed the potential for structural regulatory changes, specifically regarding the Supplementary Leverage Ratio (SLR), which limits the overall balance-sheet size of large banks. Loosening these restrictions could allow banks to absorb more government debt and potentially lower yields, thus improving financial conditions.

In addition to regulatory changes, Pal mentioned the Digital Asset Market Clarity Act of 2025 (CLARITY Act), which aims to define digital asset categories and clarify oversight responsibilities between the CFTC and SEC. He expressed optimism that the end of the government shutdown would facilitate legislative progress on this front, which is crucial for the broader cryptocurrency market.

Pal also noted that global fiscal policies, including stimulus payments in the US, ongoing balance sheet expansion in China, and potential fiscal stimulus in Europe, contribute to a synchronized liquidity environment. He believes this combination of factors will create a “liquidity flood” that could positively affect the cryptocurrency market.

Impact on the Crypto Market

• The reopening of the US government is expected to increase liquidity through TGA spending.
• The end of quantitative tightening by the Federal Reserve could lead to more favorable conditions for risk assets.
• Potential regulatory changes regarding the Supplementary Leverage Ratio may enable banks to purchase more bonds and lower yields.
• The progression of the CLARITY Act could provide clearer regulatory frameworks for digital assets, benefiting the wider crypto market.
• Ongoing global fiscal stimulus efforts may further enhance liquidity, creating a supportive environment for cryptocurrencies.

Updated: 11/14/2025, 2:23:36 PM