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Bitcoin has faced sharp downside pressure, falling nearly 40% from its $126,000 peak and trading just above $77,000. Market sentiment has turned deeply bearish, but Raoul Pal, founder of Global Macro Investor, argues that the drop reflects a temporary US liquidity contraction rather than structural weakness. He cautions against narratives claiming the crypto cycle has failed, calling them misleading and emotionally reinforced by persistent price declines.
Pal points to Bitcoin’s close correlation with the UBS SaaS Index, noting that both assets have followed nearly identical trajectories. This alignment suggests a shared macro driver rather than asset-specific issues. That driver, according to Pal, is tightening US liquidity caused by the completion of the Reverse Repo drain and subsequent Treasury General Account rebuilds, which removed liquidity without meaningful offsets. Weak ISM data further reflects these constraints.
He also highlighted the impact on long-duration assets like Bitcoin and SaaS, which are especially sensitive to liquidity conditions. Gold absorbed marginal liquidity, leaving less capital for riskier assets. Pal concludes that the current drawdown represents a temporary “air pocket,” intensified by the US government shutdown, and signals short-term pressure rather than a broken market cycle.
Key Bitcoin Levels to Watch – February 3
BTCUSD has resumed its downward move after breaking sharply from a gently sloping parallel channel. Price has now reached the key support level at $74,622. The Hull Butterfly Oscillator confirms bearish market conditions. Crypto signals are likely to monitor price reaction around this demand zone. A confirmed bearish break could open the door for further downside.
BTC Major Price Zones
Resistance Levels: $92,423, $107,303
Support Levels: $74,622, $53,990
BTC Metrics
Total Market Capitalisation: $2.64T
Bitcoin Market Capitalisation: $1.56T
Bitcoin Volume: $68B
Market Rank: #1
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