Raoul Pal: “The Road to Valhalla”: A Liquidity Flood Is Coming for Crypto and Markets

Global Macro Investor CEO Raoul Pal believes that markets are on the verge of what he calls “The Road to Valhalla,” a period where global liquidity expansion will reignite risk assets, with crypto standing to benefit the most once the current tightening phase ends.

Despite widespread fear across markets, Pal argues that the next twelve months will be defined not by panic, but by the rolling of $10 trillion in U.S. government debt, the single largest macro driver for all asset prices.

Liquidity Crunch Before the Surge

In his latest market commentary, Pal explained that the ongoing U.S. government shutdown has triggered a short-term liquidity squeeze. The Treasury General Account (TGA) is building up with nowhere to spend, while the Reverse Repo Facility (RRP), once a liquidity buffer, is nearly drained.

At the same time, the Federal Reserve’s quantitative tightening (QT) continues to pull cash from the system. The result is a temporary liquidity vacuum, hitting risk-sensitive markets first, especially crypto, which Pal calls “the most liquidity-driven asset class.”

Traditional asset managers, already underperforming their benchmarks in 2025, are clinging to equities, where 401(k) inflows and relative stability have provided some cushion. “If this liquidity drain continues longer,” Pal warned, “stocks will get hit hard too.”

The Turning Point: $250–$350 Billion Liquidity Surge

Pal outlined a sequence of catalysts that, once the shutdown ends, could flip the liquidity cycle from contraction to expansion almost overnight:

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  Treasury Spending Spree: The U.S. Treasury is set to inject $250–$350 billion into the economy over the next few months as deferred spending resumes.
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  QT Ends: Balance sheet tightening will pause, effectively expanding system liquidity.
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  Weaker Dollar Ahead: A renewed flow of capital will likely push the U.S. Dollar lower, easing pressure on global assets and emerging markets.
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  Rate Cuts Continue: Pal expects further cuts as post-shutdown economic weakness gives the Fed cover to ease without recession fears.
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  SLR Reforms: Adjustments to the Supplementary Leverage Ratio (SLR) will free up bank balance sheets, boosting credit creation and money supply.
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  CLARITY Act Passage: The long-awaited crypto regulatory framework could finally arrive, allowing banks, asset managers, and corporations to scale digital asset adoption legally.
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  Global Stimulus: China and Japan are expected to expand balance sheets and stimulate fiscally, while tariff resolutions reduce uncertainty for global trade.

Together, these forces could unleash one of the largest liquidity waves since 2020, potentially propelling Bitcoin, Ethereum, and equities into a new leg higher.

From Pain to Valhalla

Pal cautioned investors that the current drawdowns are part of a broader bull market correction — a phase he calls the “Window of Pain.” Its purpose, he says, is to test conviction before the flood begins.

“Always remember the ‘Don’t F** This Up’* rules,” Pal wrote. “Wait out the volatility. Drawdowns like this are common in bull markets, their job is to test your faith. BTFD if you can.”

His message echoes the same liquidity playbook he’s shared since early 2024: when liquidity rises, all risk assets, crypto, equities, and tech, eventually rise with it.