Diaz, 37, has recently been linked to an in-ring appearance against Paul, who at 25 is several years his junior.
But Bisping believes he will be back in the near future as “his window of opportunity is closing all the time.”
Michael Bisping expects Nate Diaz to return to the UFC after ‘one-off’ Jake Paul fight
“He’s talking about boxing, he’s talking about jiu-jitsu. The reality is, Diaz is a global superstar, an absolute sensation, and he’s a very skilled mixed martial artist. So he can compete in jiu-jitsu, he can compete in kickboxing — not wrestling — but you might even see him doing bare knuckle boxing, you never know.
“He’s going to go wherever pays the most money. But the reality is Diaz doesn’t have a lot of opportunities to earn the money that he does, outside of the organization.
“Of course the big one, the obvious one, the one people are all talking about is boxing Jake Paul. That’s a one-off event, and who knows? It’s not guaranteed to do blockbuster numbers.
“It probably would. Diaz is a draw, Jake Paul is a draw, that fight would get a lot of buzz, but that would be one fight. Diaz is 37 years old.
“His window of opportunity is closing all the time. So what? Maybe one big fight with Jake Paul.
“There’s not a lot of opportunity to earn blockbuster paydays, one after the other, after the other, like he does with the UFC.”
Michael Bisping wants to see Conor McGregor vs Nate Diaz 3
Like many fans and pundits alike, Bisping is still hoping to see Diaz compete against Conor McGregor in a long-awaited trilogy fight.
However, he doesn’t think it will happen anytime soon.
He added: “So that fight will probably happen, he’ll make some money, and then what?
“Bellator? One FC? Bare knuckle boxing? His own promotion?
“Of course there’s the third fight with Conor McGregor out there that everybody wants to see, and I’m sure he’s thinking Real Fights, that’s his promotion, going up against McGregor Sports and Entertainment.
“Them two fight each other, that’s a blockbuster fight, and then they get to split the pot 50/50, they make all the money.
“The problem is that Conor McGregor’s under contract with the UFC. I don’t know the status of his contract right now but he’s under contract and they’re probably going to offer him another sensational contract because Conor pulls in the biggest numbers of anyone.
“So what I’m saying is that fight probably won’t materialize anytime soon, and we’ll probably see Nate Diaz potentially re-sign with the UFC. That would not surprise me.”