Raoul Pal, a former Goldman Sachs executive and renowned macro investor, emphasizes that Bitcoin’s future trajectory hinges more on liquidity dynamics than on market sentiment.
He observes that several indicators are beginning to align in a pattern historically linked with sharp upward price movements.
Could Bitcoin Surge to $140,000 Much Sooner Than Anticipated?
Pal contends that Bitcoin is currently undervalued relative to the prevailing global liquidity environment. In past cycles, significant disparities between liquidity growth and asset prices have not been resolved gradually but rather through sudden and intense price adjustments.
“When this gap closes,” he explains, “Bitcoin doesn’t inch up slowly — it leaps into a higher trading range.”
A key element of Pal’s thesis centers around an anticipated liquidity turning point expected in the first quarter of 2026 as multiple macroeconomic factors converge simultaneously.
One major factor involves regulatory changes affecting banks—specifically modifications to the Enhanced Supplementary Leverage Ratio (ESLR). These changes could enable banks to hold more government debt without straining their balance sheets excessively.
This adjustment would grant the U.S. Treasury greater leeway in monetizing deficits, thereby boosting overall system-wide liquidity.
Another critical aspect is the behavior of the Treasury General Account (TGA). Historically, reductions in TGA balances have led to rapid inflows of liquidity back into financial markets. Pal anticipates this process will accelerate moving forward.
Additionally, a weakening U.S. dollar—which often signals looser financial conditions—combined with expanding credit from China’s balance sheet creates an increasingly favorable environment for risk assets like Bitcoin.
According to Pal’s analysis, market pricing has yet to fully reflect these improving liquidity conditions. His rough projection suggests that if Bitcoin realigns with current global liquidity trends, its value could approach $140,000.
…[based on models tied to liquidity], ‘Bitcoin should be closer to $140,000 if historical relationships persist,’ he stated.
This potential rise represents approximately a 106% increase over present Bitcoin prices according to TradingView data tracking BTC performance trends.
The Business Cycle Connection
Pal also highlights leading economic indicators related closely with business cycles—particularly those from the Institute for Supply Management (ISM). His framework suggests financial conditions typically lead ISM readings by about nine months followed shortly thereafter by shifts in global liquidity levels.
- The data indicates:
- An expected strengthening of ISM metrics later this year pointing toward improved economic growth;
- A series of fiscal stimuli;
- Tax incentives aimed at fixed asset investments;
- An uptick in capital expenditures focused on data centers and energy infrastructure;
- The possibility of mortgage rate relief measures emerging soon;
If both growth expectations improve alongside expanding liquid supply , historically , high – beta assets such as bitcoin tend outperform .
The October 10 Market Disruption
Despite these positive fundamentals , bitcoin ’ s recent underperformance can be traced back by pal towards structural damage caused during october 10 liquidation cascade .
Unlike traditional equity flash crashes protected by regulations preventing trade cancellations , crypto markets lack such safeguards . Forced deleveraging coincided then with exchange api outages temporarily removing key market makers & reducing available liquidity which pushed prices below fundamental values .
pal speculates exchanges might have absorbed forced sales initially only unwinding positions algorithmically during peak hours when volumes &a mp ; depth returned .
combined call-selling clustered near $100k strike price — often associated yield-generating products — further suppressed upside momentum for some time afterwards .
however , pal believes these headwinds are diminishing now paving way towards renewed bullishness ahead .
“Banana Zone”: The Final Phase Setup
pal dubs last acceleration stage within crypto cycle as “banana zone” characterized nonlinear repricing fueled primarily through rising global liqu idity coupled improving economic outlook plus fresh capital inflows from investors seeking risk exposure again . before entering banana zone phase markets usually consolidate prior volatility clearing structural resistance levels including psychological barriers like $100k mark according him . once selling pressure eases positioning remains cautious setup strengthens significantly allowing sharp upside moves emerge rapidly afterward given sufficient catalyst s provided mainly via monetary flows rather than pure sentiment swings alone .
in his view liq uidity always leads price action meaning consensus bullishness often lags behind actual upward momentum already underway especially when refinancing pressures globally force central banks or governments inject additional funds into system continuously .
bitcoin described metaphorically as “global liqu idity sponge” capable absorbing excess cash swiftly making large jumps possible once underlying systemic imbalances correct themselves closing valuation gaps seen today between actual supply-demand dynamics versus current quoted prices .
thus hitting target near $140k may not represent speculative outlier but instead reflect natural equilibrium level where bitcoin was destined all along based upon evolving macroeconomic realities driving asset valuations worldwide .
This article originally appeared on BeInCrypto titled Ex-Goldman Sachs Insider Forecasts $140K Bitcoin Rally—Here’s Why.