The Contradiction Between Liquidity and the Economic Cycle: Why Bitcoin's Peak Is Delayed Until 2026

Breaking Conventional Market Signals

Global liquidity is rising, gold is appreciating, and M2 money supply is expanding—these typically signal a boom for risk assets. However, Bitcoin is moving in the opposite direction, dropping 40% from its all-time high and even falling below the $100,000 mark. The current price is around $95,480, far from the anticipated $200,000 level.

This contrast breaks the core logic that many crypto investors have relied on for years: abundant liquidity = rising risk assets.

Raoul Pal’s Five-Year Cycle Theory

Macro analyst Raoul Pal offers an unexpected explanation—bull markets have not disappeared; they have just been delayed.

Traditionally, cryptocurrencies follow a four-year halving cycle, leading to cyclical bull and bear phases. But according to analyst Nathan Sloan’s interpretation of Pal’s view, the current economic environment has altered the timing of crypto assets. When the Federal Reserve maintains high interest rates to combat inflation and government debt pressures force the central bank to eventually cut rates, the inflow of cheap money that drives crypto rallies is delayed. As a result, the crypto cycle extends from four to five years, with the true peak not arriving in 2025 but pushed back to 2026.

Why Liquidity Is Failing

In the past 2020-2021 cycle, Bitcoin moved in sync with the global M2 money supply—this was the “golden rule” of markets. When central banks loosen monetary policy, liquidity flows into risk assets, including crypto.

But this cycle is different. U.S. government debt continues to rise, and interest costs have become a heavy burden. The government needs to cut rates to refinance, yet Federal Reserve Chair Jerome Powell remains committed to high interest rates to fight inflation. This creates a paradoxical window: nominal liquidity appears to be increasing, but actual cheap funds have yet to enter the market.

Bitcoin follows economic cycles, not just simple money supply metrics. When the cycle is extended, the timing of crypto assets also becomes misaligned.

Short-Term Pain vs. Long-Term Opportunity

If Pal’s theory holds, there are short-term risks. After the Fed shifted to easing in 2019, Bitcoin continued to decline for another six months before bottoming out and rebounding. If history repeats, the bottom could dip another 50% before recovery.

But once a reversal occurs, its power should not be underestimated. Liquidity takes time to enter the market, but once it does, rebounds tend to be rapid. The altcoin season will not be canceled—it's just waiting for this turning point.

The Coming Verification Period

The next few months are critical. The new Fed leadership may adjust policy directions, and confirmation of rate cuts will be key to triggering liquidity. Sloan notes that Pal’s theory should be either validated or invalidated before the end of Q1.

If the prediction is correct, the crypto market’s upward trend has never been canceled—only delayed. Market participants now face a choice: hold through this delay or pursue short-term gains.

Long-Term Outlook

If the macro environment develops according to the delayed bull cycle, Bitcoin could reach or surpass $200,000 by 2026. Longer-term forecasts for 2030 range between $380,000 and $900,000, mainly depending on adoption rates and institutional capital inflows.

Global recession, tightening regulation, liquidity drying up, or long-term breaches of key support levels all pose risks. But in the long run, Bitcoin’s fixed supply makes it a powerful hedge against currency devaluation.

The real test is whether the market can wait for this postponed feast.