Adjust your investment timeline, as the peak of this bull market is now expected in late 2026 due to a delayed liquidity cycle. The primary strategy is to own assets that outperform currency debasement, with crypto being the highest conviction long-term holding. Bitcoin (BTC) is currently undervalued relative to macro indicators, presenting a buying opportunity before a massive wave of liquidity arrives in the next 6-9 months. Prepare for a potential "alt season" to begin in that same 6-9 month timeframe, as a strengthening economy is expected to fuel outperformance in assets like Ethereum (ETH). Consider overweighting crypto relative to assets like the Nasdaq, as its current underperformance is viewed as a temporary buying opportunity.

Macroeconomic Outlook ("The Everything Code")

• Raoul Pal's central thesis is that the global economy is driven by a cycle of currency debasement. Governments must continuously print money (increase liquidity) to manage massive debt burdens, which are a result of aging populations and slowing growth.
• This debasement, or "money printing," is the primary driver of asset prices. The annualized growth rate of total liquidity is about 8%, which Pal considers the "hurdle rate" for investments. Assets must outperform this rate to generate real wealth.
• The traditional 4-year business cycle, which aligned with the Bitcoin halving, has been extended. Due to changes in US debt maturity structures in 2022, the cycle is now a 5.4-year cycle.
• This cycle extension is the primary reason for the recent choppy, sideways market in crypto. The expected "banana zone" or explosive growth phase has been delayed.
• The peak of the current liquidity and market cycle is now projected for the end of 2026, not 2025.
• A massive wave of liquidity is expected in the next 6-9 months and into 2026, driven by:
  • The need to roll over $10 trillion of US debt.
  • Expected fiscal stimulus and tax cuts to win elections.
  • The Federal Reserve cutting rates and using its balance sheet to support the financial system.

Takeaways

• Patience is critical. The bull market is not over; it has been extended. Investors should adjust their timelines and expect the cycle to peak in 2026.
• The core investment strategy should be to own assets that outperform currency debasement.
• The coming months are expected to see a significant increase in liquidity, which is historically the main fuel for crypto and other risk assets. The current stagnant market is likely a temporary phase before this next major leg up.

Crypto (General Market)

• The crypto asset class is described as a "supermassive black hole" and the "greatest macro trade of all time."
• It is driven by two main forces: the macro trend of currency debasement and the secular trend of network adoption (Metcalfe's Law).
• Pal projects the total crypto market cap could reach $100 trillion by 2032-2034, representing the largest and fastest wealth creation event in history. Even if discounted by 50%, this implies a market cap of $47 trillion.
• The current market is experiencing a temporary dislocation due to a lack of liquidity. Crypto, being furthest out on the risk curve, is the most sensitive to these liquidity drains.
• This has created an "alligator jaw" divergence, where crypto's price has temporarily disconnected from its historically high correlation with liquidity, gold, and the Nasdaq. Pal is confident these "jaws will close," implying crypto prices will rally sharply to catch up.

Takeaways

• Crypto should be viewed as a core long-term holding in an investment portfolio due to its potential to vastly outperform all other asset classes.
• The current underperformance relative to other assets like the Nasdaq and Gold is seen as a temporary anomaly and a buying opportunity before the next major wave of liquidity hits the market.
• Investors should focus on the long-term trend and not be shaken out by short-term volatility or periods of sideways price action.

Bitcoin (BTC)

• Bitcoin is described as a pure macro asset, not "magic internet money." Its price is 90% correlated with total global liquidity.
• It has historically outperformed the 8% currency debasement rate by 89% per year.
• The current price of Bitcoin is pricing in a recession (an ISM manufacturing index of 46), which Pal believes is highly unlikely given the forward-looking indicators for liquidity and economic stimulus.
• This pessimism has created an "excess fear gap," suggesting Bitcoin is significantly undervalued relative to the macro environment.
• He emphasizes that 30% sell-offs are normal in a Bitcoin bull market and investors should not panic when they occur.

Takeaways

• Bitcoin is currently undervalued based on its historical relationship with macro drivers. The divergence from liquidity indicators presents a potential opportunity.
• Given the expectation of a stronger business cycle and massive liquidity injections, Bitcoin is positioned for a strong upward trajectory into 2026.
• Investors should be psychologically prepared for significant corrections as a normal part of the cycle and consider them opportunities rather than reasons to sell.

Altcoins & "Alt Season"

• "Alt season" (the period when alternative cryptocurrencies massively outperform Bitcoin) is driven by the business cycle.
• A strong business cycle leads to higher corporate and investor earnings, which then get invested further out on the risk curve into assets like altcoins, small-cap stocks, and junk bonds.
• The business cycle has been subdued, which is why there has not been a major "alt season" yet. Pal dismisses narratives that it's because of "too many tokens" or other factors, stating, "It's just the economy stupid."
• The ETH/Bitcoin cross is used as a proxy for altcoin performance and is shown to be highly correlated with the business cycle.
• With economic indicators pointing to a rapidly strengthening business cycle in the next 6-9 months, the conditions for an alt season are forming.

Takeaways

• The long-awaited "alt season" has been delayed, not canceled.
• Investors looking for exposure to altcoins should be patient, as the primary catalyst (a strong economic cycle) is still ahead.
• The coming wave of liquidity and fiscal stimulus is expected to trigger a strong business cycle, which should, in turn, fuel a powerful move in altcoins.

Solana (SOL)

• Solana is mentioned as an example of an asset "further out the risk curve" that has been difficult to hold during the recent choppy market.
• Despite this, it is highlighted as a top performer in a table from XPAM, showing 166% annualized returns since its inception.

Takeaways

• Solana is used as an example of the extreme volatility but also the massive upside potential of investing in assets beyond Bitcoin.
• Its performance showcases the power of capturing the right network adoption trends within the crypto space, reinforcing the idea that patience through difficult periods can be highly rewarded.

Nasdaq

• The Nasdaq is also highly sensitive to money printing, with a 97.5% correlation to total liquidity.
• It has outperformed the currency debasement rate by 12.6% per year.
• Recently, the Nasdaq has performed well while crypto has struggled. This is because institutional asset allocators were underweight tech stocks and had to chase performance to meet their benchmarks. They are not benchmarked against crypto, so there was no similar forced buying.
• Pal questions the logic of owning the Nasdaq long-term when it is down 99.92% against the broader crypto market over time.

Takeaways

• While a strong asset, the Nasdaq's long-term return potential is dwarfed by that of the crypto asset class.
• The recent divergence in performance between the Nasdaq and crypto is due to specific market positioning and is not seen as a long-term trend.