Macro investor Raul Pal said that Bitcoin’s recent underperformance compared to gold is not unusual and could actually be a stepping stone to a stronger move later on.
Regarding the long-running comparison between Bitcoin and gold, Pal explained that gold typically moves first, and Bitcoin tends to catch up later in the cycle. He says this is not really about gold itself, but about where the global economy sits in the business cycle.
It’s not the money that matters, it’s the liquidity
Pal said gold simply reflects the financial situation. Governments often inject liquidity into the system when faced with rising debt and interest costs. That liquidity ultimately flows through asset markets.
“Financial conditions drive liquidity, and liquidity drives asset prices,” Pal explained. In past cycles, gold moved first, followed by Bitcoin later.
He added that if you compare the prices of Bitcoin and gold with a lag of about six months, their charts will almost match. The current gap, which he described as the “crocodile’s jaws,” is primarily due to market damage specific to cryptocurrencies, not due to a broken cycle.
Cryptocurrency is currently undervalued
Pal believes most investors are currently underweight cryptocurrencies, as many believe the bull cycle is over. If the market turns higher from here, he expects investors to quickly follow prices.
“Once cryptocurrencies start moving again, people will realize they are undervalued,” he said.
Why 2026 will be a breakthrough year for Bitcoin
Pal also explained why he thinks 2026 could be a big year for Bitcoin. His framework, which he calls “Everything Code,” is based on global liquidity, which he says explains about 90% of Bitcoin’s price fluctuations.
He said last year did not bring about the increase in liquidity that many had expected. The government has extended debt maturities, effectively lengthening the cycle from four to five years.
Unforeseen events such as prolonged government shutdowns or the withdrawal of liquidity from the system are the most damaging to risk assets like cryptocurrencies. Bitcoin and the broader cryptocurrency market were hit particularly hard in October when a massive exchange-wide liquidation event caused widespread damage.
Reasons why Bitcoin is flat
Pal said the crypto market is still recovering after that shock. This explains why Bitcoin is trading sideways while stocks and gold are hitting new highs.
“Cryptocurrencies are at the extreme end of the risk curve,” Pal said. “When liquidity is lost, they are the first to be hit. But when liquidity returns, they also tend to be the quickest to recover.”
According to Raul Pal, Bitcoin lagging behind gold is part of a normal macro cycle. If global liquidity improves as expected, Bitcoin could eventually make a comeback, making 2026 a key year for its next big move.
