According to Raul Pal, a former Goldman Sachs executive and macro investor, the answer depends on liquidity rather than sentiment.
Raul Pal says the signals are starting to align ahead of a historically explosive bull market.
Is Bitcoin about to reprice to $140,000 much sooner than the market expected?
Raul Pal argues that Bitcoin is currently trading at a “significant discount” compared to global liquidity conditions. In previous cycles, similar gaps between liquidity expansion and prices were not gradually resolved. They closed violently.
“If that gap narrows,” he suggested, Bitcoin will snap into a higher range rather than rallying further.
Central to Pal’s theory is a potential liquidity inflection point in Q1 2026. Several macro forces are converging at once.
First, changes to banking regulations, particularly adjustments to the Enhanced Supplemental Leverage Ratio (ESLR). Pal said this could allow banks to absorb more government debt without straining their balance sheets.
This effectively gives the U.S. Treasury more flexibility to monetize deficits and increases system-wide liquidity.
Second, developments in the Treasury General Account (TGA) are attracting attention. Historically, when a TGA is canceled, liquidity quickly returns to the market. Pal believes this process is likely to accelerate.
A weaker dollar, often a sign of easing financial conditions, combined with increased liquidity from China’s balance sheet, makes the backdrop even more supportive for risk assets.
Pal said liquidity is already improving faster than the market has priced it in. What is his rough estimate? If Bitcoin rebalances to current liquidity conditions, the price will be close to $140,000.
“…(Based on the liquidity model) Bitcoin should approach $140,000 (if the historical relationship holds),” he said.
A rise to $140,000 would mean a 106% increase in Bitcoin price from current levels.
Confirmation of business cycle
Pal also points to future indicators related to business cycles, particularly the Institute for Supply Management (ISM). In his framework, financial conditions lead the ISM by about nine months, followed closely by global liquidity.
The data he tracks suggests that ISM could meaningfully strengthen this year, suggesting an improving growth environment. All of these data listed below can contribute to increased confidence and lending activity.
Fiscal stimulus measures Tax incentives for fixed asset investments Capital investments in data centers and energy infrastructure, potential for mortgage interest rate relief
Bitcoin and other high-beta assets have historically outperformed when liquidity expands and growth expectations rise.
Overhang on October 10th
However, despite this improvement, Bitcoin continues to lag behind. Pal is tracing the connection to the October 10 liquidation cascade, which he believes is a tectonic event that damaged the market’s plumbing.
Unlike traditional stock flash crashes, cryptocurrencies have no regulatory safeguards to cancel trades. During the cascade, forced deleveraging and exchange API disruptions combined to temporarily eliminate market makers and liquidity providers. Prices have fallen more than the fundamentals warrant.
Pal speculates that exchanges may have stepped in to absorb the forced selling and later algorithmically unwinded positions at peak liquidity.
Combined with an extensive call selling strategy centered on $100,000 strikes, often tied to yield instruments, the result was sustained upside suppression.
But he believes that overhang is now fading.
“Banana Zone” settings
Pal calls the final acceleration phase of the cryptocurrency cycle the “banana zone.” This is a non-linear repricing driven by liquidity, improved growth and new capital inflows.
Before that stage begins, the market typically digests previous volatility and clears structural resistance levels. He argues that the $100,000 zone is psychological and structural. Preparedness for upside shocks increases as call selling pressure eases and positioning remains cautious.
In Pal’s view, liquidity drives prices. By the time the consensus turns bullish, the move may have already begun.
Bitcoin, which he calls a “global liquidity sponge,” could respond quickly if global refinancing pressures force more liquidity into the system.
And if the gap between liquidity and price narrows, $140,000 may not be an unreasonable goal. It may just be where the market has always been headed.
