Key Points
- •Raoul Pal highlights potential Federal Reserve intervention to address liquidity concerns.
- •Crypto markets are sensitive to shifts in US dollar liquidity.
- •US policymakers may deploy temporary liquidity measures soon.
Potential Fed Intervention and Market Impact
Raoul Pal suggests the Federal Reserve and Treasury must act immediately to prevent a year-end funding crisis, which could impact crypto and U.S. stock markets.
This intervention is crucial to maintain liquidity, affect asset prices, and mirror prior market-saving measures seen in 2018/19.
Raoul Pal of Real Vision signals the Federal Reserve's potential move to address increasing liquidity pressures. Imminent intervention may be necessary before the year's end to prevent a funding crisis. The Treasury Department's strategy might unify fiscal and monetary efforts to stimulate the public, while Wall Street absorbs currency depreciation benefits.
Potential policy adjustments could beneficially impact risk assets, including cryptocurrencies, with Bitcoin and Ethereum anticipated to react to liquidity conditions. Raoul Pal suggests short-term measures like Term Funding and the Standing Repo Facility (SRF) might be implemented to alleviate funding volatility.
"Expect several ‘temporary’ measures to add liquidity. Term Funding and SRF operations are most likely. This will eventually morph into the desperately needed changes to the SLR to allow banks to absorb more issuance and re-lever their balance sheets. This is a big liquidity bazooka. Expect in Q1."
Raoul Pal, Co-Founder & CEO, Real Vision
Market participants, including major institutional investors, await Federal Reserve action amid ongoing uncertainty. Raoul Pal's commentary on liquidity expectations contributes to current market awareness, suggesting potential regulatory shifts might reinforce liquidity in early 2026.
Historical Context and Regulatory Outlook
Did you know? The expected liquidity interventions recall financial measures from 2018-2019, where sudden market volatility necessitated rapid Federal Reserve actions to stabilize conditions.
Bitcoin, identified by its symbol BTC, retains a leading market position with a market cap of $1.90 trillion, according to CoinMarketCap. The cryptocurrency's 24-hour trading volume saw a 38.03% change, reflecting heightened market activity. Recent price trends show a decline of 10.17% over the past week, with the current price at $95,038.66.
Coincu research predicts possible financial and regulatory outcomes from these anticipated liquidity measures. Long-term regulatory changes could potentially stabilize the markets by ensuring prolonged liquidity, addressing recent price volatilities, and affecting investor sentiment. This aligns with Raoul Pal's expectations of future regulatory adjustments.