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As the latest US government shutdown ends and markets refocus on macro plumbing, Raoul Pal has sketched out a strikingly liquidity-heavy roadmap on X – one that, in his framework, has direct implications for crypto.
“So now the US Gov has reopened, what’s next?” Pal asks. He immediately points to the Treasury General Account (TGA): “Expect a few days for TGA spending to begin to significantly add to liquidity and should persist for several months.Obviously, QT ends in Dec and the balance sheet will crawl higher. We should see the dollar begin to weaken again.”
Mechanically, TGA drawdowns push cash back into bank reserves and money markets, reversing the reserve drain that built up while the government was partially shut. At the same time, the Federal Reserve has already confirmed that quantitative tightening (QT) will end on December 1, 2025, shifting from active balance-sheet reduction to full reinvestment of maturing Treasuries and a more “maintenance” stance.
When Will Crypto Prices Rise Again?
Pal’s point is that both channels tilt the system toward more dollars sloshing through funding markets, a backdrop he has long argued is constructive for risk assets, including crypto. The near-term risk, in his view, is a classic year-end funding squeeze. “The next key step is to avoid a Year End funding squeeze. Expect several ‘temporary’ measures to add liquidity. Term Funding and SRF operations are most likely.”
Here he is referring to term repo or funding facilities and the Standing Repo Facility (SRF), which the Fed can scale up to backstop banks’ access to cash if overnight rates spike. That reading aligns with recent Fed communication that elevated SRF usage and tighter money-market conditions were central reasons for ending QT early.
Pal then escalates from tactical tools to structural regulation: “That 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. SLR should lower rates as banks buy more bonds.”
The Supplementary Leverage Ratio (SLR) caps large banks’ overall balance-sheet size, regardless of asset risk. Loosening it for Treasuries and reserves has been debated for years as a way to let dealers warehouse more government debt without breaching constraints. If regulators move in that direction, it would, as Pal notes, free capacity for banks to buy more bonds and could exert downward pressure on yields—again easing financial conditions.
For crypto, that matters indirectly: Pal’s core macro thesis is that improving liquidity and lower real yields are the primary tailwinds for digital assets. Regulation is explicitly on his radar too: “Also expect CLARITY Act for crypto to begin to get finalized.”
The Digital Asset Market Clarity Act of 2025 (“CLARITY Act”) has already passed the US House and is now before the Senate. It would define digital asset categories and divide oversight between the CFTC and SEC, replacing much of the current “regulation by enforcement” model. Pal’s remark signals his expectation that the shutdown’s end clears the way for renewed legislative momentum – a key piece of the institutional puzzle for non-bitcoin crypto.
He closes by broadening the lens to global and fiscal policy: “There will also be stimulus payments and the Big Beautiful Bill fiscal goosing. China will continue balance sheet expansion. Europe will add fiscal stimulus or extra spending. The debts must be rolled and the Gov wants to super heat the economy into the Mid-Terms. This is the Liquidity Flood…. the spice must flow.”
Taken together, Pal is describing a synchronised regime: post-shutdown TGA spending, the end of QT, potential SLR relief, progressing US crypto legislation, and ongoing fiscal and monetary support in China and Europe. For crypto investors who share his liquidity-centric lens, the message is not subtle: the macro “spice,” in his view, is about to flow again.
At press time, the total crypto market cap dropped to $3.24 trillion.
