Raoul Pal predicts Bitcoin will reach its peak in 2026 based on the 5-year cycle theory - Who is Pal?

Renowned macro analyst Raoul Pal has recently shared a fresh perspective on the future of the crypto market. Pal, a widely recognized economist, believes that Bitcoin’s bull run is not over but merely delayed due to complex macroeconomic factors. According to his 5-year cycle theory, Bitcoin’s true peak will not occur in 2025 as many expect, but will shift to 2026.

Who is Raoul Pal and what is his crypto cycle theory?

Raoul Pal is one of the leading voices in macro analysis and global economic trends. According to Nathan Sloan’s analysis, Pal argues that the 4-year crypto cycle has been extended to 5 years. This means instead of experiencing a “crypto winter” this year, the market will see a delayed surge in growth into 2026, rather than reaching the previously anticipated peak.

Pal’s theory is based on analyzing macroeconomic factors affecting cash flows in the economy, which directly impact assets like Bitcoin. This viewpoint offers an alternative outlook compared to the pessimism many investors currently feel.

Why is Bitcoin breaking liquidity models?

A recent anomaly has occurred: Bitcoin has dropped 40% even as global liquidity is increasing. This is the clearest break from a model that investors have relied on for years. M2 money supply is rising, gold prices are increasing, but BTC has fallen below $100,000. Traditional calculations suggest this shouldn’t happen.

During the 2020-2021 bull cycle, Bitcoin closely followed global M2 trends. When liquidity increased, BTC rose accordingly. But this time, that pattern has broken. As Nathan Sloan notes: “Everyone expected a new high, but the results are completely opposite.”

This divergence is key to understanding why Pal and other analysts believe the current cycle has been extended rather than canceled.

The Fed’s policy – the root cause of the delay

To understand why Bitcoin is no longer tracking M2, we must look at the Federal Reserve’s monetary policy decisions. US government debt continues to grow, and paying interest has become increasingly difficult. The government needs lower interest rates to sustainably refinance debt.

However, Chair Jerome Powell has decided to keep interest rates high to combat inflation. This decision has suppressed cheap money—traditionally a catalyst for crypto growth. When the Fed maintains high rates, it keeps the economic cycle in a “stressed” state, and Bitcoin remains restrained.

Pal’s theory suggests that if the Fed shifts policy—possibly with a new chair—liquidity could be unleashed, and the expansion cycle could truly begin, pushing Bitcoin to a peak in 2026.

Short-term dip or long-term explosion? Both are possible

Pal’s forecast does not rule out further declines in Bitcoin in the near term. Historically, it is normal for liquidity to take time to permeate the market.

In 2019, after the Fed ended its tightening cycle and began easing, Bitcoin continued to fall for another six months before a strong reversal. If this pattern repeats, a further 50% drop before bottoming out is entirely plausible. However, once liquidity fully flows into the financial system, the next rally could be significant.

Altcoin season is also expected, but it will likely follow Bitcoin’s lead. Price swings will overlap, creating a complex picture for investors.

The 2026 turning point – when Pal’s theory will be tested

The coming months will be crucial in confirming or refuting Pal’s 5-year cycle theory. Changes in Fed interest rates are expected to be a turning point, reigniting liquidity. Sloan suggests early signals could appear by the end of Q1 this year.

Currently, Bitcoin trades at $65,200, down 3.01% in the past 24 hours, with a market cap of $1.303 trillion. If Pal’s theory proves correct, the crypto rally has not been canceled but merely postponed by a year, with 2026 being the year investors have been waiting for since Bitcoin neared $100,000 in 2025.

Key questions about Pal’s prediction

How high could Bitcoin go in 2026? Based on analyses, if the cycle extension is confirmed, Bitcoin could reach $200,000 or higher, depending on how markets respond to Fed policy changes and macroeconomic developments.

What are the main risks? A global recession or stricter crypto regulations could significantly reduce liquidity. Additionally, if Bitcoin fails to hold key support levels, a deeper correction could occur.

What are the long-term prospects? With a fixed supply, Bitcoin remains a strong hedge against inflation in the long run, especially as fiat currencies face devaluation pressures. Projections for 2030 range from $380,000 to $900,000, driven by scarcity and increasing institutional adoption.