Podcast Summary: The Wolf Of All Streets

Episode: "This Secret $8 Trillion Liquidity Injection Is Coming For Bitcoin In 2026!"

Host: Scott Melker
Guest: Raoul Pal
Date: January 10, 2026

Overview

In this episode, Scott Melker sits down with macro investor Raoul Pal to dissect why 2025 was a lackluster year for crypto despite overwhelmingly positive news and institutional adoption. The core theme is that "liquidity, not narratives, controls everything" in markets—especially in crypto—and that an unprecedented $7–8 trillion liquidity injection is coming in 2026 with huge implications for Bitcoin and the broader Web3 ecosystem. They explore fiscal dominance, debt rollovers, how the Fed’s power has waned, potential pitfalls, and why AI and blockchain are now inseparable forces shaping the future.

Key Discussion Points & Insights

1. 2025 Recap: Expectations vs. Reality

• Market Disappointment: Despite peak optimism (institutions, regulation wins, adoption), crypto underperformed.
  • “2025 kind of sucked.” — Melker [03:26]
  • “Everyone else is having a party and we just feel like the really uncool kids at the party…” — Pal [03:26]
• Liquidity Drought: Core cause was a lack of liquidity, not fundamentals or news.
  • “Liquidity is 90% of all price action. Everything else is us talking.” — Pal [00:31]
• Mainstreaming of Debasement: Terms like “fiscal dominance” and “financial repression” became mainstream, even among institutional players.
  • “It’s now called fiscal dominance. And fiscal dominance is we’re basically going to debase your currency.” — Pal [05:07]

2. The Liquidity Equation for 2026

• $7-8 Trillion Needed: To service debts and drive the economy, there will be an $8T liquidity injection—a scale much larger than prior cycles.
  • “We need to create about 7 or 8 trillion dollars of liquidity in the next 12 months to pay the interest on the debts.” — Pal [00:42]
• Mechanisms:
  • SLR (Supplementary Leverage Ratio) changes to force banks to buy Treasuries.
  • Fiscal stimulus and other back-channel liquidity levers.
  • Government overrides the Fed, neutering its traditional control.
    • “They wanted the treasury not to use the balance sheet as the primary mechanism of liquidity. And so they stopped QT...They’ve completely neutered the Fed.” — Pal [05:51, 08:36]

3. Structural Shifts: The Rise of ‘Fiscal Dominance’

• Fed’s Role Shrinks: Political priorities drive liquidity injections bypassing normal Fed mechanisms.
  • “They will do anything they can...They’re going to have to do something with a standing repo facility to allow the banks to fund themselves into year end. I mean what a shit show.” — Pal [10:14]
• Election Cycle Timing: Liquidity, stimulus, and regulatory “green lights” are likely to align strategically with election season.
  • “$2,000 stimulus checks coming from tariff revenue...You have to do that if you’re going to buy votes.” — Melker [18:39]

4. Crypto Market Microstructure: Who Was Selling?

• Relentless Sell Pressure: Systematic dumping (possibly from Binance offloading a massive overhang of illiquid altcoins after a technical break) drove prices down.
  • “It feels like somebody is just systematically selling everything every day. And that’s not a normal behavior.” — Melker [13:25]
  • “Finance is huge. If it’s Binance, it makes the most sense that it is...It’s just a pain in the ass for the rest of us to have to deal with this liquidity overhang.” — Pal [14:47]
• Not Nefarious, Just Forced: The behavior appears more systemic than malicious.
  • “Not nefarious, as you said... They have to sell. It’s not, you know, it’s...They’re doing it slowly.” — Melker [15:06]

5. News vs. Price: Institutional Adoption, ETF Flows, and Market Psychology

• Narratives Don’t Move Markets Without Liquidity: Despite blockbuster ETF and institutional announcements, prices stagnated because of liquidity issues.
  • “The news has been preposterously good, squared… but it tells you there's an extraneous factor, there's not enough liquidity around, which doesn’t help.” — Pal [16:57]
• Sentiment: Crypto’s psychology is battered—nobody believes “we can have nice things,” but that sets up for explosive moves when flows return.
  • “We now don’t believe we can have nice things. That’s accepted. It’s like look, we know we’re the scum of the earth, we’re crypto investors, we’re degens, we’re now being punished for all of our sins. We get it. So there’s no belief.” — Pal [20:05]

6. Business Cycle and the Altcoin Risk Curve

• Bitcoin Dominance & Macro Cycles: Outperformance of BTC over alts is tied to early/weak business cycles; alt season comes later, aligning with macro improvement.
  • “Bitcoin dominance is driven by the business cycle...The moment it changes, then everything starts to outperform.” — Pal [21:26]
• Altcoin Mechanics: Once liquidity returns, expect classic “rolling narrative cycles” (L1s, DeFi, NFTs, memes).
  • “Generally speaking, the layer ones are so easy. If they’re higher quality layer ones that have proven adoption, it’s like that’s a much easier bet.” — Pal [34:44]
• Valuations: Don’t value token networks on today’s cash flows; it’s user growth and network effects that matter, à la Metcalfe’s law.
  • “You use Metcalfe's law...number of active users multiplied by total value transacted on that network...that’s how Amazon works, Google works, all of this stuff.” — Pal [24:29]

7. Web3, Tokenization & AI: The Next Supercycle

• Smart Contracts & Tokenization: Massive institutional interest in tokenizing everything—from bonds to real-world assets, equities, and more.
  • “Every time you tokenize an equity, you’re creating block space demand which drives the value of the token network.” — Pal [23:42]
• Public vs. Private Chains: Decentralization will ultimately win out due to security; public chains will gain despite private experiments.
  • “They’ll realize decentralization is where the security of the chain lies.” — Pal [26:32]
• Web3 & Media: NFT and metaverse cycles aren’t dead—just waiting for capital and attention to return after the regulatory and financial rails are established.
  • “People don't realize the scale of this technology...we don’t have enough capital and attention to do it all in one go.” — Pal [27:50]
• 10-Year Vision: Crypto’s market cap could reach $100T+ within a decade, mostly through non-financial applications.
  • “If you extrapolate it out into this nice little log regression...you get to about 100 trillion in 10 years time...That ain't just coming from the banking system, it's not big enough. It'll come from the wholesale adoption of everything using blockchain, rails, digital ID, everything.” — Pal [28:30]

8. AI x Crypto: Perfect (and Necessary) Symbiosis

• AI Drives On-Chain Auth: Verifying humanity (zero-knowledge proofs, tokens) will become essential with the rise of deepfakes and AI-generated content.
  • “In a world of AI, we need authentication of humanhood…That’s a pretty big use case for this stuff.” — Pal [45:46]
• Data Tokenization for AI: All information (data) becomes tokenized, traded by AI agents—requiring micropayments, which only blockchain enables.
  • “I’m talking about gigantic global, instantaneous marketplaces for data that trade 24/7. We won’t be the participants. It’ll be agents pulling data, trading data…” — Pal [47:07]
  • “These things cannot exist without each other. They’re kind of co joining the hip, which is why...there basically are two technologies that matter here. It’s blockchain and AI.” — Pal [24:24, 51:02]

9. 2026: Scenarios, Risks, and Cycles

• Cycle Math: 90% of crypto’s price action is explained by global liquidity; 2026 is positioned for a “classic” boom (tripling, quadrupling Bitcoin and major alts).
  • “90% of Bitcoin’s price action is explained by global liquidity, then that’s the most dominant macro factor of all time.” — Pal [30:01]
  • “It should be a classic...What we would think of as the four year cycle, which is the debt refi year.” — Pal [51:58]
• Potential Pitfalls: Government shutdowns or unexpected events could temporarily derail the thesis, but liquidity remains the overwhelming force.
  • “If liquidity explains 90%, where can that thesis go wrong?...If it happens, it will blow up the bond market. So I don’t see how...nothing stops this train.” — Pal [52:49]
• Election Year Dynamics: Biggest market moves likely back-loaded into the second half of 2026, around the election.
  • “I am heavily weighting the back half of the year because of the election and not so expectant that we’re going to see anything explosive in the first half.” — Melker [53:18]

Memorable Quotes & Timestamps

• "Liquidity is 90% of all price action. Everything else is just us talking." — Raoul Pal [00:31]
• "Fiscal dominance is we’re basically going to debase your currency." — Raoul Pal [05:07]
• "They’ve completely neutered the Fed." — Raoul Pal [08:36]
• "What we've just created...is a new, more intelligent species than humans. We've created our own replacements...AI and Blockchain are inseparable." — Raoul Pal [43:33, 24:24]
• "All the good news matters when price is going up. It’s the bottom line. And it’s kind of the same old saying, nothing’s better marketing for an asset than higher prices." — Scott Melker [21:00]
• "I believe you use Metcalfe’s law...it’s not cash flows today." — Raoul Pal [24:29]
• "Tomorrow will be more digital than today. All information is now being tokenized...Micropayments, agents, 24/7 data markets—only tokens can deliver this." — Raoul Pal [47:07]
• "Liquidity is 90% of all price action. Which is boring. It’s weird. But everything else is just us talking when really it’s all done by that." — Raoul Pal [52:34]
• "As Lyn would say, nothing stops this train." — Raoul Pal [52:49]

Summary Table: Important Segments

| Timestamp | Key Topic | Speaker |
|-----------|------------------------------------------------|---------------|
| 00:31 | Liquidity as price driver | Raoul Pal |
| 08:36 | Fed “neutered”; SLR changes | Raoul Pal |
| 13:25 | Systematic sell pressure, Binance thesis | Scott Melker |
| 16:57 | Narrative vs. liquidity disconnect | Raoul Pal |
| 21:26 | Bitcoin dominance & business cycle | Raoul Pal |
| 23:42 | Tokenized assets and network value | Raoul Pal |
| 24:29 | Metcalfe’s law for valuation | Raoul Pal |
| 26:32 | Public vs. private blockchains | Raoul Pal |
| 30:01 | $7–8T liquidity injection | Raoul Pal |
| 34:44 | Altseason risk curve mechanics | Raoul Pal |
| 43:33 | AI, AGI/ASI: civilizational import | Raoul Pal |
| 47:07 | Agents, data marketplaces & tokenization | Raoul Pal |
| 51:58 | Cycle calls: expectations for 2026 | Raoul Pal |
| 52:49 | What could go wrong? | Raoul Pal |

Final Thoughts

Raoul summarizes the mindset for this market:

“It’s so hard not to be focused on what’s happening in the day, the week, the month. But none of it matters… Because liquidity is 90% of all price action. Which is boring. It’s weird. But everything else is just us talking when really it’s all done by that.” [52:25, 52:34]

Bottom Line:
2026 is set to be a historic inflection point. Focus less on day-to-day or narrative “noise”—all eyes should be on the macro liquidity spigot. Because once it opens, the “uncool kids” of crypto will be back at the center of the market party.