E190: Raoul Pal: How to Get Rich in Crypto Before AI Changes Everything

Raoul Pal sees crypto as part of a technology supercycle that could continue through 2030, with the market today resembling 1996–97 in the prior technology boom. Its duration, he says, depends on financial conditions, the dollar and liquidity; a 5.8-year debt rollover may point to Q2 2027. He views the recent crypto decline as a correction, not a full bear market, and says Bitcoin tracked US narrow liquidity before becoming two standard deviations oversold against gold and then Nasdaq. His own approach is to hold core positions and add when crypto falls two standard deviations below its logarithmic trend, but he warns that investors must be able to tolerate severe volatility.

Pal’s main relative-performance thesis is for smart-contract platforms, which provide rails for stablecoins, tokenized assets, perpetuals and other financial applications. He values networks by the economic activity they support or could disrupt, rather than by cash flow. He estimates Ethereum supports more than $1 trillion of value, perhaps $1.5 trillion on a forward basis; switching it off, he says, would remove roughly 70–76% of stablecoins, more than 70% of DeFi, most real-world assets, digital art and all layer twos. He considers ETH undervalued against that activity and agreed that a $300 billion valuation implied at least fivefold upside. He sees Ethereum as a likely foundation for finance and praises Solana’s speed and execution.

Pal expects AI agents to use blockchain rails and smart contracts for payments, potentially without users noticing the underlying transactions. Tokenized equities could trade online around the clock and broaden access across countries. He says agents went from zero to more than the number of humans on the Internet within ten months, but cautions that rapidly compounding AI capability does not mean AI-related investment profits will grow at the same pace. He expects three to five layer-one networks to become systemically important and capture 80% of block-space demand; beyond Ethereum and Solana, the winners remain uncertain. Sui is his major additional layer-one bet: he estimates his average entry, excluding foundation tokens, at about $1.70 and says he is underwater. Its thesis depends on user growth and economic value per user, and he gives it about 12 months to play out.

Pal predicts an economic singularity beginning around 2030–2032 as AI agents disrupt established economic relationships. He expects the first deflationary pressure to hit wages, as knowledge work can be replicated at near-zero cost, while cheaper goods will depend on corporate adoption, cost savings and more energy and materials. He anticipates five to seven years of energy-infrastructure development and says stagnant wage growth and currency debasement could make the transition difficult. AI-generated video and voice also make digital identity urgent: he says more than half of people judged a recent AI video-call demonstration to show a real person, and argues that zero-knowledge-proof digital ID is needed to verify people online.

Pal’s broader investment case is that aging populations and rising debt drive currency debasement, making technology and crypto assets worth owning for security and optionality. He calls Bitcoin monetary money—digital gold and increasingly useful collateral—and says scarcity and potential privacy features matter when assets can be seized. He sees stablecoins as especially important and points to US regulatory and Treasury support. Crypto remains, in his view, the best-performing asset class; he puts Bitcoin’s annualized return at about 45% from its lows. He also sees potential in Zcash, based on the possibility that 10% of global store-of-value demand may want privacy, while acknowledging renewed government or exchange opposition could challenge the thesis.

His practical advice is to size positions for personal risk tolerance, understand what would invalidate a thesis and monitor losses. He says investors should expect losses of at least 50% at some point: Bitcoin can fall 35%, while riskier assets can drop 70%; Solana once fell 80% during its 2020 bull run. Pal says his recorded positions over 21 years were profitable 65% of the time, with an average profit of about 50% per trade, but positions can take a long time to work and market structures can change. He does not use stop losses and warns against copying his trades or allocations. His own priority is lifestyle and family security, not maximizing returns, and he says investors should hold only what they understand and can withstand through volatility.