The crypto market didn’t just stumble over the weekend—it fell through the floor.
A brutal sell-off erased nearly $250 billion from total market value in a matter of days, reigniting a familiar but urgent question: Is crypto structurally broken—or simply collateral damage of a tightening global macro environment?
While prices across the board collapsed with ferocity, a growing number of macro analysts argue this is not the end of the crypto story. Instead, they say the market is reacting to a U.S. dollar liquidity squeeze, not a fundamental failure of digital assets.
🧠 Raoul Pal: “This Is Liquidity, Not a Crypto Collapse”
Raoul Pal, founder and CEO of Global Macro Investor, pushed back strongly against claims that Bitcoin has “decoupled” or broken down as an asset class.
In a post on X, Pal argued that Bitcoin’s drawdown mirrors stress seen across long-duration risk assets, especially U.S. software-as-a-service (SaaS) equities. According to him, the price action is not uniquely crypto-driven—it’s macro-driven.
“Bitcoin and SaaS stocks have traded almost identically through this downturn,” Pal noted, pointing to a shared liquidity shock rather than sector-specific weakness.
In this phase of the cycle, Pal says, U.S. total liquidity has become the dominant force, outweighing broader global liquidity metrics that typically guide crypto prices.
💵 Where the Liquidity Went
Pal outlined a convergence of macro events that have quietly drained capital from the system:
The completion of the Fed’s reverse repo drawdown in 2024, removing a key liquidity release valve
The rebuilding of the U.S. Treasury General Account (TGA) in mid-2025, pulling cash out of markets
The recent partial U.S. government shutdown, disrupting normal cash flows
A sharp rally in gold, which absorbed marginal liquidity that might otherwise have flowed into higher-risk assets like crypto and growth stocks
The result? A vacuum of risk capital—and crypto felt it immediately.
📉 Bitcoin Cracks, Futures Gap Explodes
The damage was swift and historic.
Bitcoin plunged more than 10%, sliding from weekend highs near $84,000 to lows around $76,000, opening one of the largest CME futures gaps ever recorded.
At the time of writing:
Bitcoin trades at $76,839, down 12.6% on the week and nearly 39% below its all-time high
Ethereum dropped almost 7% in 24 hours to around $2,243, now more than 54% below its peak
The broader crypto market followed suit, with total capitalization shrinking to roughly $2.66 trillion, down from about $3 trillion just a week earlier.
🔥 Liquidations Wipe Out Leverage
As prices collapsed, leverage didn’t stand a chance.
Over $2.5 billion was liquidated in a single day
More than $5.4 billion has been wiped out since Thursday
Total derivatives open interest fell to $24.2 billion, its lowest level in nine months
The flush-out was exacerbated by thin weekend liquidity, a perfect storm for cascading liquidations.
🌍 Macro Pressure Everywhere
The sell-off didn’t happen in a vacuum. It coincided with a rapid buildup of macro stress:
Renewed trade tensions
Rising yields on long-dated Japanese government bonds
Escalating geopolitical risks across the Middle East and Asia
Crypto, once again, behaved less like a hedge and more like a high-beta expression of global risk appetite.
🧾 On-Chain Data Signals Fragile Confidence
Blockchain data paints a cautious picture.
Exchange outflows dropped sharply after the sell-off, signaling limited dip-buying interest
Large Bitcoin holders have reduced exposure by an estimated 10,000 BTC since early February
Short-term holders are sitting on deep unrealized losses, with NUPL metrics firmly in capitulation territory
However, analysts note that these levels do not yet match historical final bottoms. Without stronger accumulation from long-term investors, relief rallies risk fading just as quickly as they appear.
🔍 Breakdown or Macro Reset?
The numbers are ugly. The sentiment is shaken. But according to macro-focused analysts like Raoul Pal, this isn’t crypto falling apart—it’s crypto reacting exactly as it should in a world starved of dollar liquidity.
If U.S. liquidity conditions stabilize, the same forces that crushed prices could reverse just as violently.
Until then, the message from the market is clear:
This isn’t about belief in crypto—it’s about the price of money itself.