Capital Rotation from AI to Crypto Could Extend Rally Says Raoul Pal

Raoul Pal, founder of Real Vision, suggests that capital is beginning to shift back from AI to crypto, potentially extending the crypto industry’s rally. He notes that a weakening US dollar could act as a catalyst for this movement, although he remains cautious about declaring a full green light for crypto. Higher bond yields and a strong dollar have been limiting liquidity, but a lower dollar could change that dynamic.

Pal believes Bitcoin may miss out on much of the economic activity generated by AI agents, which is likely to benefit smart contract platforms like Ethereum and Solana. He points out that AI agents could use stablecoins for transactions, a development that could increase activity on these platforms. However, he cautions that Solana’s activity is currently more speculative compared to Ethereum’s higher capital concentration.

While AI has been a competitor for funds, Pal sees a pause in the AI trade as an opportunity for crypto to catch up. He prefers a scenario where the dollar weakens, the yield curve steepens, and banks increase lending, which would support crypto’s rise. However, he acknowledges that a crash in AI stocks would be detrimental, as it could suck liquidity out of the system.

Pal has stopped publicly predicting price targets but acknowledges the possibility of Bitcoin reaching a million dollars by 2032, citing growing adoption, ETF interest, and Bitcoin’s use as collateral.