Keynote: EXPAAM's Raoul Pal

Global macro investor and Real Vision founder Raoul Pal took the stage at Breakpoint 2025 to deliver what he called a "dose of hopium" to a crypto community feeling battered by 2025's unexpected market conditions. His message was clear: the crypto cycle isn't over—it's actually been extended, and up to $97 trillion in wealth creation still lies ahead for patient investors.

Summary

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Raoul Pal's keynote centered on his "Everything Code" framework—a macroeconomic model he developed to understand how demographics, debt cycles, and global liquidity drive all asset prices, including cryptocurrency. His central thesis: crypto is fundamentally a macro asset, and once investors understand this, the seemingly chaotic price movements become predictable patterns driven by measurable economic factors.

The presentation revealed a crucial discovery that explains 2025's disappointing performance: the typical four-year crypto cycle has actually extended to 5.4 years due to changes in government debt maturity structures. In 2022, when interest rates dropped back to zero, the U.S. Treasury extended debt maturities, pushing out the entire liquidity cycle. This means the market peak that many expected in 2025 is now projected for late 2026.

Pal explained that 2025's struggles stemmed from specific, temporary liquidity drains rather than structural problems with the crypto market. The Treasury refilling its general account (their checking account) sucked liquidity out of the system, and the government shutdown compounded the issue. Since crypto sits at the furthest end of the risk curve, it gets hit hardest when liquidity contracts—but it also gains the most when liquidity returns.

Looking forward, Pal painted an extraordinarily bullish picture. With $8 trillion in new liquidity expected over the next 12 months, $13 trillion needed just to service interest payments, and regulatory changes like the Supplementary Leverage Ratio (SLR) relaxation potentially unlocking $3-5 trillion in bank liquidity, the conditions for a massive rally are forming. He projects the total crypto market could reach $100 trillion by 2032-2034, representing $97 trillion in wealth creation from current levels.

Key Points:

The Everything Code: Understanding Crypto as a Macro Asset

Raoul Pal's "Everything Code" framework provides a systematic way to understand cryptocurrency markets through macroeconomic factors rather than technical analysis or narrative-driven speculation. The framework begins with a fundamental economic equation: population growth plus productivity growth plus debt growth equals economic growth.

The problem Western economies face is structural population decline. The labor force participation rate continues shrinking, which means economic growth must come from increasing debt. This creates a self-reinforcing cycle where governments must print money to service existing debts, leading to currency debasement. This debasement is the mega-trend that drives asset prices higher over time—and crypto, being the furthest out on the risk curve, captures the most upside from this phenomenon.

Pal demonstrated through multiple charts that Bitcoin, when detrended, tracks almost perfectly with the ISM Manufacturing Survey (a key business cycle indicator). This correlation isn't magical or coincidental—it exists because liquidity drives the business cycle, and the business cycle drives all risk assets. The same pattern holds for the Russell 2000, crude oil, industrial metals, and crucially, the ETH/Bitcoin ratio that signals "alt season."

Why the Crypto Cycle Extended to 5.4 Years

One of the most significant revelations from Pal's presentation was his explanation for why 2025 didn't deliver the explosive gains many expected. The answer lies in government debt management strategies that most crypto analysts never consider.

Since 2008, governments have issued debt at near-zero interest rates with three-to-five-year maturities. Rolling over this debt—and the interest payments that keep increasing—creates the cyclicality we observe in markets. However, in 2022, when rates temporarily dropped back toward zero, the Treasury extended average debt maturities to 5.4 years. This seemingly technical change pushed out the entire liquidity cycle.

This means we're not at the end of a four-year cycle looking at a crash—we're still in the trough of a 5.4-year cycle, with the peak now projected for late 2026. The chart patterns that previously topped at four years now have an extra 1.4 years of runway. Understanding this shift is crucial for investors who might otherwise panic-sell at exactly the wrong time.

The Alligator Jaws: Explaining 2025's Divergence

A recurring visual in Pal's presentation was what he called "alligator jaws"—the growing gap between where crypto prices are and where macro indicators suggest they should be. This divergence began in July 2025 and accelerated after October, creating significant "excess fear" in the market.

The explanation is straightforward: the Treasury drained liquidity by refilling its general account at a time when the reverse repo facility (which normally absorbs such drains) was already depleted. Then the government shutdown froze additional liquidity flows. Crypto, being furthest out on the risk curve, felt this contraction most acutely. The NASDAQ, by contrast, didn't experience the same divergence because institutional investors were 88% underweight versus benchmark and were performance-chasing.

Pal emphasized these are temporary, not structural, factors. When liquidity returns—and it must return because the government needs to roll trillions in debt—crypto should snap back to close the alligator jaws. Historical parallels from previous government shutdowns show markets quickly recovering once liquidity resumes flowing.

The $97 Trillion Opportunity Ahead

Perhaps the most striking part of Pal's presentation was his quantification of the wealth creation opportunity in crypto. Currently, global assets total approximately $880 trillion, with gold at $30 trillion and crypto at just $3 trillion. This means crypto represents roughly 0.3% of global assets.

Extrapolating the logarithmic growth trend of the crypto market, Pal projects a $100 trillion market cap by 2032-2034. This would represent $97 trillion in wealth creation—more than the combined wealth of the Middle East's sovereign funds, Russian billionaires, American tech entrepreneurs, Wall Street bankers, and real estate magnates.

What makes this projection particularly compelling is that it assumes current adoption trends continue. Institutional adoption through ETFs has only just begun. Web2 companies migrating to Web3 infrastructure is still in early stages. And the regulatory environment, while challenging, is gradually becoming more favorable. Even halving Pal's estimate (assuming he's "a total moron," as he put it) still yields $50 trillion in market cap—representing extraordinary wealth creation potential.

Liquidity: The Only Factor That Matters

A recurring theme throughout Pal's presentation was the dominance of liquidity as a market driver. He declared it "the most dominant factor in all of markets I've ever seen in global macro" and "the easiest macro environment of all time" because this single factor explains so much.

Fed Net Liquidity, total U.S. liquidity, and global M2 money supply all correlate strongly with Bitcoin and crypto prices. When liquidity expands, crypto rises. When liquidity contracts, crypto falls. Everything else—narratives, technological developments, regulatory news—is noise unless it affects liquidity.

Looking ahead, the liquidity picture is bullish. The Federal Reserve has begun cutting rates. The SLR (Supplementary Leverage Ratio) rules are being relaxed to allow banks to create more liquidity. The government must roll $10 trillion in debt, which requires accommodative monetary policy. Financial conditions indicators, which lead total liquidity by about three months, suggest continued improvement. The dollar is expected to weaken, which improves financial conditions further.

Solana's 166% Annual Returns and the Risk Curve

While focused primarily on macro factors, Pal highlighted Solana's extraordinary performance metrics. Since inception, Solana has delivered approximately 166% annualized returns—compared to the NASDAQ's roughly 18% annually. When you divide the NASDAQ by Bitcoin or Solana, the traditional index has lost 97-99.99% of its value in crypto terms.

This outperformance isn't random—it's a function of where Solana sits on the risk curve. As the business cycle strengthens and liquidity increases, investors move further out the risk curve seeking higher returns. This benefits smaller cap stocks in traditional markets and alternative cryptocurrencies in the digital asset space. The ETH/Bitcoin ratio and broader "alt season" patterns are driven by this same business cycle dynamic.

Facts + Figures

• Global debt to GDP currently stands at approximately 140-160% and is projected to continue rising due to demographic decline

• The crypto cycle has extended from 4 years to 5.4 years due to Treasury debt maturity extension in 2022

• Approximately $8 trillion in new liquidity is expected over the next 12 months

• $13 trillion will be needed just to service interest payments on existing government debt

• SLR rule relaxation could unlock $3-5 trillion in additional bank liquidity

• Global assets total approximately $880 trillion, with gold at $30 trillion and crypto at just $3 trillion

• Crypto market cap is projected to reach $100 trillion by 2032-2034 based on logarithmic trend extrapolation

• This represents $97 trillion in potential wealth creation from current levels

• NASDAQ averages approximately 18% annual returns; Solana has delivered 166% annualized returns since inception

• Institutional investors were 88% underweight NASDAQ versus benchmark during 2025's divergence

• Dividing NASDAQ by Bitcoin shows traditional markets have lost 97-99.99% of value in crypto terms

• Both private and public sector debt in the U.S. exceed 100% of GDP each

• The business cycle peak is now expected in late 2026, not 2025

Top Quotes

"My job is the hopium dealer and I've come to inject some hopium in your veins because you lose track of time horizons, you all panic when something goes not according to your one hourly chart."

"It's the most dominant factor in all of markets I've ever seen in global macro. It's the easiest macro environment of all time. It's driven by this one cycle."

"It's all noise unless you're talking about liquidity."

"We've memed a $3 trillion asset class into existence. And now we've got Wall Street to start adopting it. But they've only just started. We're still front running all of Wall Street."

"By 2032 to 2034, we get to $100 trillion. That means we're 3% of the way there. And we've got $97 trillion of wealth to create."

"If we create $97 trillion of wealth, it's more wealth than all of the Middle East, every Russian billionaire, every American tech billionaire, every Wall Street banker, every real estate billionaire."

"It pains me to see the lack of patience that people have. It's a macro game. Macroeconomic data comes out one month at a time. And people worry about the squiggles on the chart."

"Your game is to just keep hold of your tokens, have patience, don't overuse leverage, and just wait it out. It works over time. It compounds at an extraordinary rate."

"Is that a structural factor or a temporary factor? It's a temporary factor, because we know we've got to roll the debt."

"It's the greatest macro trade of all time."

Questions Answered

Why didn't the crypto market perform as expected in 2025?

The 2025 disappointment stems from two specific liquidity drains, not fundamental problems with the crypto market. First, the U.S. Treasury refilled its general account (their checking account), which sucked liquidity out of the financial system at a time when the reverse repo facility was already depleted and couldn't absorb the drain. Second, the government shutdown froze additional liquidity flows. Since crypto sits at the furthest end of the risk curve, it gets hit hardest when liquidity contracts. The NASDAQ didn't experience the same divergence because institutional investors were performance-chasing and underweight traditional indices.

Has the four-year crypto cycle ended?

The four-year cycle hasn't ended—it's been extended to approximately 5.4 years. In 2022, when interest rates dropped back toward zero, the U.S. Treasury extended average debt maturities from around 4 years to 5.4 years. Since the crypto cycle is actually driven by the debt maturity cycle (not the Bitcoin halving), this pushed out the entire liquidity cycle. The market peak that many expected in 2025 is now projected for late 2026. We're currently in the trough of this extended cycle, not at the end of it.

What drives cryptocurrency prices according to macro analysis?

Liquidity is the single most dominant factor driving cryptocurrency prices. Fed Net Liquidity, total U.S. liquidity, and global M2 money supply all correlate strongly with Bitcoin and crypto. The underlying driver is the debt cycle: as populations shrink, governments must issue more debt to maintain economic growth. They then print money to service that debt, which debases currency and drives asset prices higher. Crypto, being furthest out on the risk curve, captures the most upside from this debasement. Everything else—narratives, technological developments, regulatory news—is noise unless it affects liquidity.

How much wealth creation potential remains in the crypto market?

According to Raoul Pal's analysis, approximately $97 trillion in wealth creation lies ahead. Currently, crypto represents roughly $3 trillion in a world of $880 trillion in global assets. Extrapolating the logarithmic growth trend suggests crypto could reach $100 trillion by 2032-2034. Even halving this estimate conservatively suggests $50 trillion in market cap growth potential. This would represent more wealth than all Middle Eastern sovereign funds, Russian billionaires, American tech entrepreneurs, and real estate magnates combined—and it's accessible to anyone globally.

When should we expect "alt season" to arrive?

Alt season is driven by the business cycle, not arbitrary timing. When the economy strengthens and liquidity increases, investors move further out the risk curve seeking higher returns. The ETH/Bitcoin ratio and broader altcoin performance correlate strongly with the ISM Manufacturing Survey (a business cycle indicator). Currently, the ISM is still below 50 (indicating economic contraction), but with the Trump administration and Treasury Secretary Scott Bessent committed to stimulating the economy for political reasons, the business cycle should strengthen through late 2026. Alt season should arrive as this strengthening occurs.

Why does Solana outperform traditional assets so dramatically?

Solana has delivered approximately 166% annualized returns since inception compared to the NASDAQ's roughly 18% annually. This outperformance reflects crypto's position at the far end of the risk curve. When governments debase currency through money printing to service debt, all assets rise—but those furthest out on the risk curve rise most. The debasement mega-trend, driven by structural demographic decline forcing ever-increasing debt, acts as a "supermassive black hole" pulling assets higher. Solana, as a high-growth layer-1 blockchain, captures maximum upside from this dynamic.

What liquidity events should investors watch for?

Several significant liquidity events are approaching that should benefit crypto markets. The Federal Reserve has begun cutting interest rates. SLR (Supplementary Leverage Ratio) rules are being relaxed, potentially unlocking $3-5 trillion in bank liquidity. Approximately $10 trillion in government debt must be rolled over, requiring accommodative monetary policy. Financial conditions indicators suggest continued improvement, and the dollar is expected to weaken. All of these factors point toward approximately $8 trillion in new liquidity over the next 12 months, which should close the "alligator jaws" gap between current prices and macro-indicated values.