Capital starting to rotate back to crypto from AI: Raoul Pal

Raoul Pal said that a weaker U.S. dollar would provide a ‘‘green light’’ for further crypto gains by loosening constraints on liquidity, while higher bond yields and the strong dollar have so far restricted capital flows. He framed a preferred macro outcome as a lower dollar, a steeper yield curve and greater bank lending; if that does not occur, his ‘‘second best scenario’’ is a sideways AI equity market that permits capital to rotate into crypto. Pal cautioned that an outright collapse in AI equities would be harmful because it would indicate liquidity being withdrawn from markets. Pal expects much of the new economic activity generated by AI ‘‘agents’’ to accrue to programmable smart-contract platforms, naming Ethereum and Solana as likely beneficiaries. He pointed to recent product developments enabling agents to pay for web content with stablecoins (an AWS feature introduced in June) and described how protocols such as Coinbase’s x402 can handle verification and settlement using USDC on Base. Pal envisions agents issuing tokens to raise short-term funding, carry out work and generate returns, with smart contracts used to transact those flows. On the competition between Solana and Ethereum, Pal acknowledged strong activity metrics for Solana but emphasized Ethereum’s substantially larger capital density. He noted that DefiLlama data showed about 3.2 million active Solana addresses versus roughly 387,000 on Ethereum in a 24-hour window, while Ethereum holds about $54.4 billion in decentralized finance protocols compared with Solana’s $6.7 billion. Pal described Solana’s on-chain behavior as concentrated in smaller, more speculative ‘‘clip sizes,’’ and said Ethereum’s higher value-per-user gives it an advantage in economic density. Pal also discussed market dynamics more broadly, saying pauses in the AI trade have allowed liquidity to rotate into crypto and pointing to an August period when Bitcoin rose roughly 25% while Nvidia shares declined. He said he has stopped publishing public price targets because of recycling of his forecasts, and characterized a $1 million Bitcoin by 2030 as a ‘‘meme’’ tied to broader adoption and ETF interest, while personally expressing no objection to the idea by 2032.