Raoul Pal looks at 2026: Liquidity fully released, encryption and the financial system entering a new phase simultaneously.

Former Goldman Sachs executive, current member of the Sui Foundation, and macro investor Raoul Pal emphasized several times in a recent interview that his core judgment about the future market does not focus on short-term price performance, but rather on “how liquidity is being reopened at the institutional level.” In his analytical framework, the importance of 2026 does not come from the highs and lows of market sentiment, but from the formation of a new cycle of funds after monetary policy, banking systems, government finance, and encryption systems gradually synchronize.

Liquidity pressure alleviated, moving towards a new stage in 2026

Raoul Pal pointed out that the market will experience a forced Liquidity squeeze period in the second half of 2025, and the function of this phase itself is to pave the way for the subsequent environment.

He believes that by the year 2026, multiple conditions will simultaneously be met, including that the Federal Reserve ( has ended quantitative tightening, the banking system is forced to re-inject liquidity to support year-end and annual fund allocation, and there has been a smoother mechanism established between the U.S. government and banks for absorbing and undertaking government bonds. With these conditions combined, it means that “money shortage” will no longer be a problem at the system level.

From the central bank to the government, the debt management framework is undergoing a shift.

Pal specifically pointed out that the most critical structural change in the future lies in the management focus of debt and Liquidity, which is gradually shifting from the Fed to the government itself.

He pointed out that as regulatory agencies such as the Fed adjust the supplementary leverage ratio for banks holding U.S. government bonds )eSLR(, banks are encouraged under the institutional design to become the main purchasers of government bonds. The government can continue to issue government bonds, while banks absorb these bonds and reintroduce funds into the economy through leverage use, lending, and market operations.

In Pal's description, this is not a short-term policy adjustment, but rather a set of new mechanisms expected to be fully operational by 2026.

Liquidity sources change, multiple channels open simultaneously.

Pal stated that this entire system and policy design could ultimately bring about an additional liquidity level of up to three to five trillion dollars. Such a scale has not yet accounted for the potential subsequent rate-cutting cycle, new deposits in the banking system, disposable income boosted by a new round of stimulus policies, and the chain reaction on the housing market and corporate financing resulting from the decline in long-term interest rates.

According to Pal, the liquidity environment in 2026 will not rely on a single policy effort, but rather multiple funding channels being opened simultaneously, which will overlap at different levels to collectively shape a new capital circulation.

The regulatory framework is becoming clearer, and encrypted assets are entering the institutional system.

When discussing cryptocurrency assets, Pal did not focus on price trends, but rather returned to a more fundamental question, which is “Can it be practically used?” He pointed out that once the CLARITY Act is officially implemented, the legal and institutional positioning of cryptocurrency assets will be clearly defined, institutions will no longer need to speculate on compliance boundaries, and general users will be able to use encryption tools under clear rules.

At the same time, the financial system itself will also be equipped to formally incorporate encryption assets into the existing operational and service framework. Pal believes that what 2026 symbolizes is not a discussion of the encryption market standing outside the system, but rather its formal entry into the internal structure, becoming a part that can be operated and integrated.

The role of stablecoins is changing, and the capital inflow mechanism is gradually taking shape.

Pal also believes that the most underestimated factor by the market in 2026 is the impact brought about by the continuous expansion of stablecoins. He pointed out that the growth of stablecoins is equivalent to allowing funds from all over the world to become indirect holders of U.S. Treasury bonds with lower thresholds.

This not only helps the U.S. government roll over its massive maturing debt more smoothly, but also expands the sources of funds beyond traditional domestic buyers, directly linking global liquidity with the U.S. fiscal system. In his framework, this is one of the important reasons why global funds can continue to flow back into the financial system by 2026.

Global synchronized release of funds, the new round of structural cycle starts in 2026.

Finally, Pal emphasized that 2026 is not just about the United States taking action. He mentioned that China is still expanding its balance sheet, Japan is also undertaking large-scale fiscal stimulus, and other major economies are similarly releasing funds.

In this context, the core of 2026 is not the loose monetary policy of a single country, but rather the global simultaneous entry into a capital competition phase. Pal personally believes that the market has already endured the most painful liquidity squeeze period, and what follows is a stage where institutions, banks, governments, and encryption assets begin to operate smoothly at the same time.

He does not define 2026 as simply a bullish or bearish year, but rather sees it as a key node for the real formation of a new round of financial structure and encryption system.

)Coinbase Outlook 2026: The encryption market moves out of speculation dominance, institutionalization accelerates significantly(

This article by Raoul Pal looks at 2026: Liquidity is fully released, and encryption and the financial system enter a new phase simultaneously. Originally appeared in Chain News ABMedia.