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The biggest move of this crypto bull market may still be waiting ahead and it's going to shock everyone. Months of sideways price action have convinced many investors that the excitement is over, but beneath the surface, the forces that have driven every major crypto rally are beginning to line up once again.
Liquidity is improving, inflation pressures could ease, and Ethereum has spent years building what many believe is the foundation for its next major breakout. Raul Pal believes investors are making a costly mistake by focusing on short-term volatility instead of the larger macro cycle. He argues that global liquidity remains the single most important driver of crypto, and that patient investors have the greatest chance of benefiting from it.
Tom Lee also believes crypto spring has already begun, pointing to improving macro conditions and Ethereum's long period of consolidation as reasons why the next phase of the bull market could be approaching. In this video, we're breaking down why Raul Pal believes patience beats trading, why he says liquidity is the most important driver of crypto, why Tom Lee expects Ethereum to finally break out, and why both experts remain highly bullish on 2026.
; I know it's for those of you in crypto, it's like it's [ __ ] frustrating. You probably hate me, you hate everybody. Um And then there's the confusion amongst time horizons. You know, one person's got one time horizon, other person cares about the cycle, one person says the cycle's dead, I think it's a mid-cycle sort of It's all [ __ ] noise.
It's all just [ __ ] noise. You just have to focus on what is the big game. What is going to unfuck your future? Unfucking your future is compounding. [ __ ] uh [ __ ] up your future is trying to trade. And there are some people who are good at trading. But I say this seriously is the best performing brokerage accounts at every brokerage are the ones of dead people.
It's because they don't sell. And traders, it's very hard to meet many rich traders. There are lucky traders. There's people who do well for a period of time. But there's very few people who trade that make compounding returns. It's very difficult to do. Right? It's a really, really difficult skill set.
So buy and hold, you could be as dumb as me. I mean, honestly, you can be absolutely stupid and make money. As long as you understand where you are in the cycle, what to do, and don't panic. Raoul Pal believes one of the biggest reasons investors fail is because they spend too much time reacting to short-term price movements.
Every correction feels like the end of the bull market, while every rally convinces people to chase the next big move. According to Pal, that constant cycle of buying and selling destroys the very thing that creates lasting wealth, compounding. Instead of trying to predict every swing, he argues that investors should focus on the larger macro cycle.
If liquidity is expanding and the long-term trend remains intact, temporary volatility becomes far less important. That is why Pal often points to a famous investing lesson. Some of the best performing brokerage accounts belong to investors who simply stayed invested. They avoided emotional decisions and allowed time to work in their favor.
That mindset is becoming increasingly relevant as more institutions enter the market. Bitcoin and Ethereum ETFs continue attracting long-term capital from investors who are looking beyond weekly price action. Large companies are also treating Bitcoin as a strategic treasury asset instead of a speculative trade.
Those trends reduce the importance of short-term market noise and strengthen the case for patient investing. Powell is not claiming trading never works. He is saying that very few people can consistently outperform by jumping in and out of the market. For most investors, understanding the broader cycle offers a much better chance of success.
If liquidity continues improving throughout 2026, patience could once again become one of the most valuable advantages an investor can have. The market, however, is influenced by more than investor psychology. There are also institutional forces that can temporarily move prices without changing the bigger picture.
People that realize this and I've traded this stuff for 30 years is the index inclusion trade. So, you're bringing a monster waiting in, which is SpaceX. Everything has to be weighted down. So, what you tend to get is firstly, I know this is complicated. So, firstly, SpaceX comes out. Short squeeze cuz not all the order books are filled.
Then, the arbitrageurs start selling that to start thinking about how to position for um post-IPO pop. So, you get a bit of that, you get a bit of trading, price pulls back. But, the big game is the game that's happening now, it's been happening for about a week, is all these arbitrageurs, all of the hedge funds, and some of the index funds start front running the situation where SpaceX gets bought, but these stocks, every single stock gets sold.
So, what you get is all the stocks in the Nasdaq or a whole bunch of them, particularly the big weights, get sold. And so, you're seeing that, but the Nasdaq itself holds still. And then, you should see, as the squeeze happens, you should see SpaceX squeezing into it, but the trade the arbs are setting in for is shorting the other side, and then, as the um the index funds sort of computationally just have to do the trade um which is to sell those other shares, they then buy into them, closing out their shorts.
And then usually it clears afterwards. So, that's a big thing that's happening that's happening there. Raoul Pal says some of the biggest moves in financial markets have nothing to do with changing fundamentals. They happen because of market structure. Using the SpaceX public listing as an example, he explains how index inclusion can create temporary buying and selling pressure that often confuses retail investors.
When a company joins a major stock index, index funds eventually have to own it. Before that happens, hedge funds and arbitrage traders often position themselves in advance. They buy the incoming company while shorting other stocks that are expected to lose index weight. Once index funds complete their required purchases, those short positions are closed and the market usually begins to normalize.
Pal's point is that these moves are mechanical, not emotional. They are driven by rules that large funds must follow rather than by a sudden change in economic conditions. Investors who misunderstand these events often mistake temporary weakness for the beginning of a broader downturn. The same principle can apply to crypto.
Large inflows into Bitcoin and Ethereum ETFs, corporate treasury purchases, and institutional portfolio rebalancing can create periods of unusual volatility that do not necessarily reflect weakening demand. Short-term price swings may look dramatic, but they can simply be the result of large pools of capital repositioning themselves.
For long-term investors, understanding this distinction is important. Market structure can influence prices for days or even weeks, but it rarely changes the bigger trend. Once temporary flows settle, attention usually returns to the macro forces driving the cycle and those forces remain supportive if liquidity continues to improve.
That brings us to the biggest idea behind Raoul Pal's entire investment framework, one that he believes explains nearly every major financial trend happening today. ; Let's talk about the everything code. The everything code is the process by which we have to service In fact, let's just quickly go through the everything code.
We got a bit of time. I don't care. I've got nothing to do. Blondie's abandoned me, so I'm going to go and do this while she's in Florida. Um The everything code. What is the everything code? Well, actually I'm I'm writing a book about this. It's going to come out in October, but the everything code is really the most important work at a macro level that I've done.
Um and it's all about demographics. So, as the labor force as the population gets older, the labor force participation rate falls with it because old people don't work. Okay, great. We kind of understand that. You can see the correlation. It's pretty [ __ ] obvious. Then, what is less obvious to people and the greatest macro chart of all time, trademarked, um which nobody else uses cuz nobody understands it, is very [ __ ] simple.
Is the labor force participation rate falling is exactly the inverse of the US government's debt to GDP. So, debt to GDP rises exactly in proportion with the fall in the labor force. I e. The magic formula, GDP growth , is old people means lower population growth. Old people means less productivity, which means more debt.
It's perfectly proven in this chart, and that is the story of the world that we live in. And then the other story of the world that we live in is liquidity, which is in it red here, is the thing that pays the difference. So, they print money to pay the debt. That is the everything code. And once you understand that, you can see everywhere.
Raoul Pal believes the biggest driver of financial markets is not a new technology, a government policy, or even interest rates by themselves. He calls it the everything code, a framework that connects demographics, debt, and liquidity into one long-term cycle. In his view, understanding this relationship helps explain why risk assets continue to rise over time despite repeated economic setbacks.
His argument begins with demographics. As populations age, fewer people participate in the workforce. Slower labor force growth reduces economic expansion and makes it harder for governments to generate enough tax revenue to support rising obligations. To bridge that gap, debt continues to increase.
Over time, central banks and governments are often forced to inject more liquidity into the financial system to keep economic activity moving. That expanding liquidity has historically benefited scarce assets. Gold has often performed well during periods of monetary expansion, and Pal believes Bitcoin is emerging as a digital version of that same concept.
Ethereum also stands to benefit because growing liquidity has repeatedly encouraged investors to move further out on the risk curve in search of higher returns. Recent macro data continues to support this discussion. Inflation has cooled significantly from its previous highs while many central banks have shifted toward easier monetary policy or signaled a willingness to provide additional support if economic growth weakens.
Those conditions have strengthened expectations that liquidity could continue improving into 2026. For Powell, this is the foundation of the bull market. Short-term headlines may create volatility, but liquidity has consistently been the fuel behind the largest moves in crypto. If that trend continues, the strongest phase of this cycle may still be ahead.
Tom Lee reaches a similarly bullish conclusion, although he approaches it from a very different angle. So, why do I believe crypto spring is here? Well, this is a the price chart of Ethereum and uh you can see it's been consolidating uh stuck in this range for almost 5 years now. And it is waiting for a decisive breakout.
Now, if you're bearish, you might think it's going to break down. I'll explain why I think this is going to be uh resolved in a very bullish breakout. First, uh the first catalyst is the Iran war is going to end. Now, I know a lot of people don't think there's any connection between crypto prices and a war in Iran, but keep in mind the Iran war has caused problems with the price of oil and the supply of oil.
Now, why would this matter to anybody? Well, oil is a root driver of inflation. So, if there's an inflation problem created by oil, then it means central banks have to be tight globally. And that's actually what we're seeing. Oil prices have gone up. Petroleum products have been supplies have been severely impacted and policy makers have to raise interest rates.
So, if the war ends, I think that you're going to see a collapse in oil. Uh in fact, if any of you are technicians, you know that this is probably likely that if the war ends, the terror premium will come out of oil. And maybe we see $40 oil. Ethereum has huge negative correlation to oil right now. In fact, it's the highest inverse correlation ever in the history of Ethereum.
So, clearly rising oil is negative for ETH price. We can see it statistically. And if you don't believe me about inflation and oil, take a look at this chart. This chart starts in 1985. The top chart is the price change of oil. The bottom is core CPI. And as you can see, every time we had a sustained spike in oil, core CPI accelerates higher.
So, if oil if this is a long war, we're going to have inflation. And in fact, the FOMC last month said the same thing. In their minutes, they said that policy firming would be appropriate if inflation were to continue and persist above 2%. n a war that ends soon. Pomly the market is much closer to a breakout than most investors realize.
While many people see years of sideways price action as a sign of weakness, he sees something very different. In his view, Ethereum has spent nearly 5 years building a base, and long periods of consolidation have often been followed by some of the strongest advances in crypto history. One reason for his optimism is the broader macro environment.
Lee argues that geopolitical tensions pushed oil prices higher, creating inflation concerns that forced central banks to keep monetary policy tighter than investors wanted. If those pressures continue to fade, inflation could remain under control and give policy makers more room to support economic growth through easier financial conditions.
That matters because crypto has historically responded well when liquidity improves. Lower borrowing costs and stronger risk appetite have often encouraged capital to flow back into higher growth assets including Bitcoin and Ethereum. Lee also points out that Ethereum has shown a strong inverse relationship with oil during this period, making lower energy prices another potential tailwind for the market.
Since those comments were made, inflation has continued trending lower than its peak, and several major central banks have already started easing policy. Markets are now paying close attention to the pace of future rate cuts because additional liquidity could strengthen the case for another powerful crypto rally.
For Lee, crypto spring is not just a catchy phrase. It describes a market where macro conditions are steadily becoming more favorable. If those trends continue through 2026, the next breakout may look much bigger than many investors currently expect. Both Tom Lee and Raoul Pal arrive at the same destination through different paths, and that is what makes their combined message so compelling.
Raoul Pal and Tom Lee arrive at their bullish outlook from different perspectives, but they both point toward the same conclusion. Pal focuses on liquidity, demographics, and the long-term macro cycle. Lee looks at inflation, market conditions, and Ethereum's technical setup. Together, their arguments suggest that the foundation for a larger crypto rally is still being built.
That does not mean the market will move in a straight line. Pullbacks, periods of uncertainty, and sudden volatility have been part of every major crypto bull market. What matters is whether the bigger drivers continue moving in the right direction. So far, institutional adoption has continued to expand, Bitcoin and Ethereum ETFs have attracted significant long-term capital, and governments around the world are gradually shifting toward policies that support easier financial conditions.
At the same time, blockchain adoption continues to grow beyond simple speculation. Stablecoins are processing record transaction volumes. Tokenization is expanding into traditional finance, and major financial institutions are investing heavily in digital asset infrastructure. Those developments strengthen the long-term investment case by increasing real-world demand for blockchain networks.
For investors, the lesson from both experts is remarkably similar. The greatest opportunity rarely comes from predicting every short-term price movement. It comes from recognizing when powerful macro trends are working in your favor and having the conviction to stay invested while those trends unfold.
If liquidity continues to improve and adoption keeps accelerating, 2026 may not simply extend the current bull market. It could become the period that defines this entire crypto cycle and rewards those who stayed focused on the bigger pictur.
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