$250 Billion Crypto Crash Blamed on US Liquidity Crunch

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$250 Billion Crypto Crash Blamed on US Liquidity Crunch, Says Raoul Pal

Written by Aaron S.,

Editor-In-Chief

Last Updated: February 02, 2026

Key Takeaways

Raoul Pal says the $250 billion crypto drop happened because US dollar liquidity fell, not due to crypto itself;
Bitcoin and SaaS stocks both depend on future growth and easy credit, so they moved down together;
Gold gains and US funding troubles reduced liquidity, which pushed riskier assets like crypto lower.

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$250 Billion Crypto Crash Blamed on US Liquidity Crunch, Says Raoul Pal

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A recent selloff wiped about $250 billion from the crypto market, but analyst Raoul Pal believes the cause lies in shrinking US dollar liquidity.

Pal, who heads Global Macro Investor, said on X that the downturn fits a pattern hitting several risk-sensitive investments at once.

He pushed back against claims that Bitcoin’s BTC $78,673.73 cycle has ended or that the market is “broken". He noted that Software-as-a-Service stocks have fallen alongside crypto.

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Pal explained that SaaS shares and Bitcoin behave similarly because they rely on expectations about future growth and adoption. Their value depends on the availability of money in the system and on borrowing costs.

When liquidity tightens and rates stay high, these assets tend to lose ground. He added that while many say “crypto is dead” or that “AI is taking over software", these stories miss the bigger picture: both groups are reacting to the same economic pressure.

He stated, "The rally in gold essentially sucked all marginal liquidity out of the system that would have flowed into BTC and SaaS. There was not enough liquidity to support all these assets, so the riskiest got hit".

Pal pointed to temporary strains in US funding channels as an added factor. Two government shutdowns and technical issues have limited short-term cash flow.

Recently, Arthur Hayes said Bitcoin could rise if the US Federal Reserve prints money to support Japan’s struggling bond market. How? Read the full story.