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While discussions continue in the cryptocurrency market following the sharp drop known as the October 10th crash, Raoul Pal made a noteworthy assessment.
Real Vision co-founder and CEO Pal argued in a podcast released this week that, according to global liquidity models, Bitcoin should be priced at around $140,000 under current conditions. However, he noted that cryptocurrencies have underperformed compared to stocks and gold since the events of October 10th.
According to Pal, the events of October 10th began with a chain reaction of liquidations. He stated that the macroeconomic shock of that day, particularly the impact of US President Donald Trump’s tariff policies, triggered large-scale liquidations in highly leveraged positions.
Pal claimed that a brief outage occurred on the Binance API at the peak of the liquidation wave, preventing professional market makers from placing orders, providing liquidity, and hedging. He stated that this created a chain reaction, further accelerating liquidations, and that leading centralized exchanges were forced to step in using their balance sheets to keep the system running.
Pal estimates that centralized exchanges were forced to add approximately $10 billion worth of assets to their inventories during the event. He claims that the prolonged market weakness seen afterward stemmed from the gradual depletion of this inventory. Accordingly, these exchanges attempted to reduce their positions by selling off their assets piecemeal, particularly through algorithmic and intensive selling during the opening hours of the US stock markets.
Pal predicted that the current selling pressure would be largely absorbed by the end of February, after which Bitcoin could experience a rapid recovery, reaching the $140,000 level. He also argued that Strategy’s debt risk was manageable, noting that the company’s founder, Michael Saylor, had strengthened the balance sheet through bond issuance and equity increases.
On the other hand, Changpeng Zhao (CZ) responded to these allegations in a Space broadcast on Friday. Zhao stated, “The October 10th crash was not caused by a systemic or operational problem at Binance. Binance is a regulated institution and there is no question of it engaging in any illegal activity.”
*This is not investment advice.