Raoul Pal Says Weakening Dollar Could Boost Crypto Markets

Real Vision founder Raoul Pal suggests that a weakening US dollar could give cryptocurrency markets a boost, helping to extend the industry’s current rally. In an interview with Cointelegraph, Pal noted that higher bond yields and a strong dollar have been restricting liquidity flow. He stated, "If they can engineer the dollar lower, then we get a green light for further movement in crypto." However, he cautioned against excessive optimism, indicating that not all crypto assets have received a full green light yet.

Pal also believes that Bitcoin may miss out on much of the economic activity generated by AI agents, which is likely to flow to smart contract platforms like Ethereum and Solana. He highlighted that AI agents could eventually fund projects by issuing tokens, potentially increasing activity on these networks. Pal acknowledged the growing adoption of AI agents but cautioned that Solana’s activity involves smaller amounts compared to Ethereum, which has a much higher concentration of capital.

Discussing market cycles, Pal mentioned that Bitcoin’s recent rally from August 19 to August 25 saw a 25% price increase to $80,000, coinciding with a seven-day losing streak for AI bellwether stock Nvidia. He suggested that pauses in the AI trade have allowed capital to rotate into crypto. Pal emphasized the importance of liquidity for market health, stating that an AI crash would be unwelcome as it could indicate liquidity being "sucked out of the system."

Pal’s preferred scenario for crypto growth includes a weaker dollar, a steeper yield curve, and increased lending by banks. However, he acknowledged that borrowing costs have been rising, with the US 10-year Treasury yield reaching 5.29% in September and the Federal Reserve raising its benchmark rate by a quarter-point. As a second-best scenario, Pal suggested that AI stocks trading sideways could allow capital to rotate into crypto.