Structural Failure, Not Fundamental Breakdown

In an interview with trader Michael van de Poppe, Pal said liquidity evaporated as market-maker APIs failed and leverage, often underestimated by traders, triggered rapid, unavoidable liquidations through smart contracts.

The Oct. 10 selloff was driven by market structure rather than fundamentals compared to past equity flash crashes.

Large market makers or exchange-linked entities, particularly on Asian exchanges, were likely forced to absorb significant inventory during the crash.

Those positions have since been unwound gradually, which, according to Pal, helps explain the steady decline in altcoins through November and December.

Bitcoin Remains Range Bound

Raoul Pal said Bitcoin's continued consolidation between roughly $80,000 and $90,000 reflects constrained global liquidity tied to year-end balance-sheet limits and regulatory factors, not a deterioration in fundamentals.

He expects BTC to catch up once liquidity conditions improve and stressed the importance of keeping "dry powder" during periods of market dislocation.

Pal also cautioned that forecasts are conditional and must evolve with changing conditions, reiterating that his goal is to be directionally right over full market cycles rather than precisely correct in the short term.

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