In recent commentary, macroeconomic strategist Raoul Pal elaborated on the significant October correction experienced across cryptocurrency markets, attributing the downturn primarily to a structural liquidity failure within the trading infrastructure rather than a fundamental change in Bitcoin's intrinsic value or market thesis.
During an extended interview with trader Michael van de Poppe, Pal provided a detailed breakdown of the mechanics behind the market turmoil observed on October 10. He explained that liquidity, which is vital for smooth market functioning, sharply evaporated as key market-maker APIs ceased to operate effectively. This breakdown in market-maker infrastructure resulted in cascading liquidations - rapid, unavoidable selloffs triggered by leverage employed by traders, often underestimated in scale and impact.
Pal emphasized that the selloff episode was driven by the structural aspects of the market itself rather than deterioration in Bitcoin’s underlying fundamentals. He drew parallels to past equity flash crashes, suggesting the underlying catalysts were rooted in market microstructure disruptions instead of shifts in asset valuation principles.
Focusing on participants in the cryptocurrency market, Pal identified large market makers and entities closely affiliated with exchanges, particularly in the Asian sector, as the probable absorbers of substantial inventories during this liquidity crisis. He noted that these significant positions, acquired under stress conditions, have been methodically unwound over time. Pal considers this gradual liquidation of holdings a key factor contributing to continuing declines in altcoins observed through November and December.
Regarding Bitcoin's price behavior following the October shock, Pal pointed out that BTC has remained range-bound, trading between approximately $80,000 and $90,000. He linked this price plateau not to any weakening of Bitcoin's foundation but to constrained liquidity at a global level. Specifically, Pal cited balance-sheet constraints associated with year-end financial reporting and regulatory considerations as limiting overall market liquidity, thereby positioning price consolidation within this context.
Pal further conveyed optimism that Bitcoin’s price will realign with its longer-term trajectory once liquidity conditions improve. He underscored the importance for investors to maintain "dry powder" — capital reserves ready for deployment — during periods of market dislocation to capitalize on eventual rebounds when stress conditions ease.
He also issued a prudent caveat regarding investment forecasting, acknowledging that predictions should remain flexible and responsive to evolving market conditions. Pal highlighted his own approach focused on directional accuracy across extended market cycles instead of seeking precision in short-term movements.
The discussion exemplified the complexity of market dynamics, emphasizing that temporary technical failures in trading structures can amplify volatility independently of fundamental asset valuation. Pal’s insights provide a nuanced perspective on price action during crisis episodes, suggesting resilience in Bitcoin's core investment thesis despite episodic turbulence.