U.S. Treasury Action to Blame for Bitcoin’s Break From Global M2, Raoul Pal Reveals

Bitcoin just decoupled from traditional monetary systems—and Raoul Pal says Washington's fingerprints are all over the rupture.

The Global Macro Investor CEO points directly to U.S. Treasury maneuvers as the catalyst behind Bitcoin's dramatic divergence from global money supply trends. While central banks worldwide keep printing, Bitcoin's charting its own course.

Policy Shockwaves

Treasury Department decisions are creating ripple effects across digital asset markets. Pal argues regulatory crackdowns and monetary policy shifts forced Bitcoin's hand—pushing it toward independence from legacy financial indicators.

The Great Decoupling

Global M2 expansion continues its predictable path upward. But Bitcoin? It's breaking formation like a fighter jet ditching formation. The digital asset's volatility now reflects policy uncertainty rather than monetary expansion patterns.

Wall Street's watching this schism with equal parts fascination and terror—after all, nothing frightens traditional finance quite like an asset that won't follow the script. Another case of regulators creating the very volatility they claim to prevent.

TGA refill plays spoilsport

Pal argues that the break is not a failure of the model but rather the result of actions by the U.S. Treasury through its Treasury General Account (TGA). The TGA is the government’s operating account at the Federal Reserve, used to receive taxes, bond sale proceeds, and other inflows while also funding federal expenditures.

When the Treasury seeks to rebuild this account by issuing more bonds than needed to cover immediate obligations, it effectively drains liquidity from the system, reducing the pool of capital available to risk assets. According to Pal, since July, the Treasury has issued about $500 billion in bonds to replenish the TGA, pushing its balance NEAR $800 billion, a multi-year high.

This large-scale withdrawal of cash has hit liquidity-sensitive assets like crypto the hardest, explaining bitcoin’s sideways action despite rising M2.

Importantly, Pal believes the TGA is now sufficiently replenished, meaning the liquidity drain is likely over and should fade completely by the end of the month. If that happens, liquidity conditions will normalize, and bitcoin's braoder rally could resume following its M2-driven trajectory upward.

However, to counter Pal’s argument, it is worth noting that tech stocks and Gold have continued to set new all-time highs, suggesting that broader risk appetite remains intact.

While the TGA replenishment may have weighed heavily on crypto, the sharper impact could also reflect heavy selling pressure from long-held coins, which helps explain the deviation between bitcoin and global M2.