Capital starting to rotate back to crypto from AI: Raoul Pal — SkimNews
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- Raoul Pal says capital is rotating from AI back into crypto, pointing to Bitcoin's Aug. 19–25 rally of roughly 25% to $80,000 while Nvidia logged seven consecutive losing sessions over the same stretch.
- Pal predicts Bitcoin will miss most AI-driven crypto economic activity, which he expects to flow to smart contract platforms Ethereum and Solana as software begins transacting through their networks.
- Pal warns an AI bubble pop would hurt crypto by sucking liquidity out of the system; his preferred macro setup is a weaker dollar, steeper yield curve, and banks expanding lending — though the 10-year Treasury yield climbed to 5.29% in September and the Fed hiked its benchmark rate.
- Solana recorded roughly 3.2 million active addresses over a 24-hour period on Monday versus Ethereum's 387,000, per DefiLlama — but Ethereum holds about $54.4 billion in DeFi protocols versus Solana's $6.7 billion, and Pal argues Ethereum's higher 'economic density' (TVL per user) outweighs Solana's headline activity.
- Pal pushes back on Multicoin Capital co-founder Kyle Samani, who predicted Solana would surpass Ethereum's market capitalization 'this market cycle,' saying Samani 'needs to hold his horses a little bit' and characterizing Solana's activity as 'speculation' with 'smaller clip sizes.'
- Pal calls the million-dollar Bitcoin by 2030 target a 'meme' reflecting adoption and ETF interest but says a 2032 arrival is plausible; he says he has stopped issuing public price targets because his forecasts get clipped and recirculated online.
Why it matters: Pal's framework splits the crypto trade into two theses: Bitcoin benefits if AI merely pauses (liquidity rotation), while Ethereum and Solana benefit if AI agents actually deploy on-chain. With the 10-year yield at 5.29% and the Fed having hiked rates, the dollar-weakening, steeper-curve backdrop he wants isn't in place — so his 'second best' sideways-AI scenario may be the actual path that funnels capital into crypto.
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