Fiat's Hidden Debasement Drives Crypto's 2026 Surge, Pal Argues

Raoul Pal, co-founder of Real Vision and macroeconomic analyst, has extended the projected timeline for the current crypto bull cycle, forecasting that it could persist through 2026. This assertion, made during a Sept. 25 “Everything Code” masterclass with Global Macro Investor (GMI) head of macro research Julien Bittel, is rooted in a framework connecting global liquidity, demographic shifts, and debt dynamics. Pal and Bittel argue that structural factors—including a declining labor-force participation rate and subdued productivity—are driving governments to expand liquidity at an annualized rate of 8%, creating conditions favorable to high-beta assets like crypto .

The analysts emphasized that traditional metrics like inflation rates obscure the “hidden debasement” of fiat currencies, which they estimate requires a 11% hurdle rate for investments to maintain real value. To counteract this, they advocate for hyper-concentration in crypto and tech assets, which outperform traditional portfolios in GMI’s long-horizon analysis. Pal described Bitcoin as a “super-massive black hole of assets,” capable of outpacing both inflation and the erosion of fiat value .

Central to their thesis is the interplay between liquidity and macroeconomic indicators. GMI’s Financial Conditions Index, a composite of commodities, dollar strength, and interest rates, leads total liquidity by three months, which in turn precedes the ISM Manufacturing Index (ISM) by six months. The ISM, currently below 50, sets the tone for risk assets, including crypto. Pal and Bittel highlighted that Bitcoin’s price trajectory aligns with ISM dynamics, with diffusion-index patterns mirroring those of small-cap equities, cyclicals, and emerging markets. As the ISM approaches the 50 threshold, risk appetite shifts down the capital structure, from Bitcoin to Ethereum and eventually smaller altcoins .

The current cycle differs from the 2020–2021 bull run, which peaked as liquidity and the ISM synchronized in March 2021. Today, liquidity is re-accelerating into a $9 trillion debt-refinancing window, with the ISM still below 50 and forward indicators trending upward. This setup, Pal noted, resembles the 2017 Q4 impulse, with the added potential for the cycle to extend into 2026 due to a lengthened refinancing timeline. “It is extremely unlikely that it tops this year,” he stated, citing the absence of both liquidity and ISM peaks .

Bittel added that the recent “sideways chop” in crypto markets reflects a $500 billion liquidity drain from the Treasury General Account (TGA) since mid-July. However, this drain is nearing an inflection point, with DeMark timing signals suggesting a reversal by year-end. The People’s Bank of China’s record-high balance sheet has also partially offset U.S. liquidity constraints . In GMI’s models, Bitcoin’s log-regression channel—termed “network adoption rails”—interacts with time and cycle amplitude to project potential price targets. While these are not forecasts, they illustrate how extended cycles could push prices higher, with hypothetical ISM prints in the low-50s translating to mid-$200K levels .

Pal and Bittel also contextualized crypto’s growth within a broader secular S-curve, contrasting fiat-driven asset inflation with GDP-anchored earnings and wages. They projected the digital asset market could expand from $4 trillion today to $100 trillion by the early 2030s, with Bitcoin occupying a role akin to gold within a larger stack. Operational advice included maintaining exposure to large-cap crypto networks, avoiding leverage, and aligning time horizons with macroeconomic cycles rather than short-term volatility .

At press time, the total crypto market cap stood at $3.67 trillion, with Bitcoin trading at $88,617 . Pal’s analysis aligns with broader macroeconomic trends, including a weakening U.S. dollar and easing monetary policy, which have historically driven crypto cycles. While institutional participation remains robust, the analysts caution against overleveraging and emphasize patience as the cycle unfolds .

Source: [1] Liquidity Wave Extends The Crypto Bull Run Into 2026, Predicts Raoul Pal (https://cryptorank.io/news/feed/88628-liquidity-wave-crypto-bull-run-2026-raoul-pal) [2] Raoul Pal Predicts Crypto Bull Cycle to Peak by 2026 (https://theccpress.com/raoul-pal-crypto-bull-cycle-2026-forecast/) [3] Raoul Pal: Bitcoin Bull Market Could Extend To … (https://www.newsbtc.com/news/raoul-pal-bitcoin-bull-market-could-extend-to-2026-heres-why/) [4] Biggest Bull Run Yet? Expert Says Crypto Cycle Could Extend to … (https://coindoo.com/biggest-bull-run-yet-expert-says-crypto-cycle-could-extend-to-2026/)