Why Is Crypto Crashing? Kevin O’Leary and Raoul Pal Reveal Major Reasons

The crypto market is struggling to regain momentum as Bitcoin and other digital assets face continued pressure. Slowing US liquidity and regulatory uncertainty are two major concerns weighing on the market, according to Real Vision founder Raoul Pal and investor Kevin O’Leary.

While Pal believes tighter financial conditions are limiting money flowing into crypto, O’Leary says the lack of clear US regulations is preventing businesses from adopting blockchain technology on a wider scale.

Raoul Pal Says Liquidity Shortage Is Hurting Crypto

Raoul Pal believes slowing US liquidity is one of the main reasons behind the crypto market’s weak performance.

Pal said US liquidity has remained largely flat since July 2026. A stronger dollar, rising interest rates and a flatter yield curve have slowed money creation through the banking system.

He explained that crypto needs increasing liquidity to support price growth, but current conditions are not providing enough support.

“Markets have gone nowhere. Narrow liquidity, so this is total liquidity including the banking system loans and leases. It’s not growing as fast,” Pal said.

Despite the current market downturn, he is continuing to buy crypto. He revealed that he made two purchases in 2026, including one during the February sell-off.

He believes Bitcoin is still undervalued based on its long-term liquidity trend, but does not expect an immediate recovery. He expects the US dollar to weaken towards 93 on the dollar index. Lower interest rates and a weaker dollar could improve market conditions and support crypto prices.

Pal also remains positive about Ethereum and Solana. He outlined a long-term scenario in which Ethereum could reach $18,000 by Q2 2027 and $60,000 by mid-2028 if its trend continues. However, he described these levels as a possible market path, not guaranteed targets, and identified $1,500 as an important risk level.

Kevin O’Leary Says Regulatory Uncertainty Is Holding Back Crypto

Kevin O’Leary points to regulatory uncertainty in the US as another reason the broader crypto market is struggling.

He believes businesses are hesitant to adopt blockchain services and stablecoins because they lack clear regulatory guidelines. The delay in passing the CLARITY Act is adding to this uncertainty.

“We really need to get that done,” O’Leary said, referring to the CLARITY Act.

O’Leary explained that his holding companies already use USDC for treasury management and cross-border payment settlements. However, many other businesses are waiting for approval from their compliance departments before adopting similar services.

He noted that the GENIUS Act has established a legal framework for stablecoins in the US, but broader rules covering blockchain infrastructure and other crypto services are still missing.

“The rest of the infrastructure and blockchain and everything else in treasury management isn’t done till the compliance department of institutions say you can do it,” he said.

According to O’Leary, this regulatory uncertainty is slowing institutional adoption and limiting the wider use of blockchain technology.