Liquidity Night: A Dostoevsky Take on Crypto Markets

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Over the weekend, a cruel gust swept through the market, and crypto was dragged into the wretched theatre. They say roughly $250 billion vanished from the total, as spectators turned their backs, perhaps counting their sins in the dark. Some of the sorrow struck Bitcoin hard, while others whispered that the contagion touched tech stocks as well, like a rumor that refuses to die in the tavern of numbers.

Bitcoin Faces A Confidence Test

Bitcoin has been groping for a foothold in the murk, a pale pilgrim seeking a base. Today it slipped below $80,000, and from the 2025 zenith above $126,000 it has fallen about 40%. The soul of the thing trembles; the ledger squeaks under the weight of fear, and the crowd pretends not to notice while clutching their coins with a grimace of irony.

Traders and on-chain trackers reveal waning appetite to buy. Retail enthusiasm has cooled to a polite indifference, as if interest itself exhaled and forgot to return. Large outflows from spot ETFs have been recorded, and momentum has deserted the gauges that pretend to measure destiny.

Support near $73,000-$75,000 is now the stage where many watch, while some players expect more bellies to be gashed before calm returns-if such a thing as calm remembers to return at all.

Markets Are Moving Together

Analysts observe that Software-as-a-Service stocks and Bitcoin fell in tandem, as if two fragile souls sharing a single fever dream. Both depend heavily on the hope of future growth; when money tightens, they are the first to feel the lash of fate, the first to blush with mortal fear.

Gold rose in the same breath, and some traders argued that the leap into bullion drew marginal cash away from riskier wagers. When fewer dollars slither between banks, hedge funds trim leverage with a brutal efficiency, and the riskiest positions suffer first, like sinners at a confessional line.

– Raoul Pal (@RaoulGMI) February 1, 2026

Macro Liquidity, Not A Crypto-Only Issue

According to Raoul Pal, founder and CEO of Global Macro Investor, the squeeze sprang from a narrower pool of US dollar liquidity rather than a crisis unique to crypto.

The mechanics he lists are technical: the Treasury General Account is rebuilt, funding costs rise, and the Reverse Repo Facility has less of a buffer that used to swallow extra cash.

“The rally in gold sucked all marginal liquidity out of the system that would have flowed into BTC and SaaS,” Pal said.
“There was not enough liquidity to support all these assets, so the riskiest got hit,” he added.

These shifts can quietly drain liquidity even when no headline screams crisis. Government funding hiccups add friction to the system. When liquidity deserts the room, assets tied to future cash flows suffer a cruel fate.

Different Voices On The Fed Nomination

Rumors say the nomination of Kevin Warsh to steer the Federal Reserve has added to the nerve-wracking mood. Some market voices fear rate relief may be delayed, and the clock in the hall of coins seems to tick louder in the wrong direction.

Some analysts say sentiment swayed on the idea that rate relief might arrive later. Yet Raoul Pal resists despair, arguing that President Trump’s team will steer policy toward easier rates and that Warsh will play along the script.

Views differ. This ambiguity keeps many traders from laying fresh money into stretched bets, as if the room itself were listening for a footstep that never comes.

A Cautious But Not Despairing Close

At the moment of writing, price action looks fragile and rallies have been brief. Yet some analysts expect the liquidity drain to ease and for capital to trickle back once funding conditions brighten a little, perhaps with a sigh and a shrug.

The coming weeks will show whether buyers return near the low-$70k area or if selling sinks deeper into the shadow. Reports note that risk appetite often returns before headlines change, but only when dollars are strolling back into the room with a dull swagger.

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2026-02-02 15:47