Crypto Market Loses $250B as US Liquidity Dries Up, Not a BTC Crisis: Analyst

Key insights

• The crypto market lost $250 billion in value over the weekend, Raoul Pal said.
• Bitcoin (BTC) price traded near $75,969 as traders focused on U.S. liquidity conditions.
• On-chain claims about Binance selling spread, but no verified totals appeared.

The latest crypto market news framed the weekend selloff as a U.S. liquidity shortage, not crypto damage. Pal, chief executive of Global Macro Investor, said macro plumbing drove the drawdown.

He said Bitcoin fell alongside Software as a Service stocks, weakening a crypto-only story. That framing mattered because it shifted blame from tokens to funding conditions.

Pal said gold’s rally pulled marginal liquidity away from risk assets. The crypto news cycle then treated the drop as a macro stress event.

Crypto Market News Points To SaaS Correlation, Not Sector Failure

Pal said Bitcoin and Software as a Service equities tracked the same path. He described both as long-duration assets sensitive to interest rates.

Pal said investors discounted future adoption when liquidity tightened.

He said the shared decline challenged claims that crypto market broke. Besides, he noted that the traders also blamed new artificial intelligence tools for software weakness. He said those parallel narratives relied on headlines, not cross-asset behavior.

Pal compared the UBS SaaS Index with BTC price slide to support correlation. He said two unrelated markets sold off together, implying one dominant driver.

He argued that the driver came from U.S. liquidity, not crypto market mechanics. Pal said commentators pushed multiple culprits as prices fell.

He said some blamed exchange dynamics and large institutions for the drawdown. He said the correlation made those explanations incomplete.

Pal said global liquidity measures usually tracked Bitcoin and major technology indexes. He said U.S. total liquidity dominated this phase of the cycle. He said the United States provided key global liquidity at turning points.

Pal linked weak liquidity to soft Institute for Supply Management surveys. He urged patience to the crypto market traders as time passed.

US Liquidity Plumbing Drives The Crypto Market Drawdown

Pal said two government shutdowns worsened a temporary liquidity drain. He said issues in U.S. plumbing amplified the crypto market shock. He said the Reverse Repo Facility drain completed in 2024.

He said Treasury General Account rebuilds once paired with Reverse Repo drawdowns. He said the empty Reverse Repo pool removed that offset. Pal also noted that those rebuilds then became pure liquidity drains.

Pal said the U.S. Treasury’s behavior during shutdowns added pressure. He said Treasury avoided drawing down the cash account after the last shutdown. In addition, he said Treasury instead added to it, extending the drain.

The expert explained that the gold rally absorbed remaining marginal liquidity across markets. He said Bitcoin and Software as a Service stocks suffered as risk assets. He said investors hit the riskiest assets first.

The weekend drawdown removed $250 billion from total crypto market capitalization, Pal said. He framed the move as an air pocket, not a cycle break. He said liquidity constraints produced brutal price action.

Crypto News Tests Warsh Fears And Exchange Dump Claims

Jeff Mei, chief operations officer at BTSE, said traders feared a hawkish Federal Reserve chair. He said markets expected slower interest-rate cuts under Kevin Warsh. He said that impression pressured crypto market risk appetite.

Pal rejected that view and called the hawk label outdated. He said Warsh followed a Greenspan-era playbook of rate cuts. He said policymakers let growth run hot and watched inflation.

Pal said artificial intelligence productivity gains constrained inflation in that playbook. He said Warsh avoided balance sheet shocks because reserves constrained banks. He said policy mechanics mattered more than personalities.

Pal said Warsh cut rates and avoided other interventions. He said Donald Trump and Scott Bessent ran liquidity through banks. He said officials also pursued a full reduction in the enhanced Supplementary Leverage Ratio.

Pal said the shutdown would resolve this week and clear the last hurdle. He said a partial Treasury cash drawdown then returned liquidity. He said fiscal stimulus and rate cuts also supported liquidity later.

Separately, DeFiTracer claimed Binance liquidated millions of dollars in the crypto market. The post said Binance dumped Bitcoin and Ethereum every few minutes. The claim cited no transaction hashes or exchange statements.

Those competing narratives left traders watching near-term liquidity signals. Pal said the liquidity drain neared its end after shutdown resolution. Bitcoin’s next move then still hinged on cash conditions, not crypto news.