Raoul Pal says pauses in AI stocks let capital rotate into crypto
In brief
- Raoul Pal says pauses in the AI trade have allowed capital to rotate into crypto.
- A weaker US dollar could give crypto a "green light," Pal says.
- Pal expects AI agent activity to favor Ethereum and Solana over Bitcoin.
- Kyle Samani "needs to hold his horses" on SOL overtaking ETH, Pal says.
Liquidity isn't abundant yet
Pal's argument comes down to liquidity. He told Cointelegraph's Trade Secrets that higher bond yields and the strong dollar are keeping it from flowing freely. According to Cointelegraph, the US Dollar Index has been trading at the year's highest levels, the 10-year Treasury yield climbed to 5.29% in September and the Fed raised its benchmark rate by a quarter-point.
“If they can engineer the dollar lower, then we get a green light for further movement in crypto,” he says.
His preferred outcome is a weaker dollar, a steeper yield curve and banks expanding the money supply through more lending. If that doesn't happen, Pal's "second best scenario" is for AI stocks to trade sideways so capital can rotate into crypto.
Cointelegraph pointed to one window where that pattern showed up. BTC rose about 25% to $80,000 between Aug. 19 and Aug. 25 (the outlet called it Bitcoin's possible cycle recovery), while Nvidia notched seven consecutive losing sessions over the same stretch.
A crash isn't the goal, though.
Cointelegraph noted that a bursting AI bubble would signal liquidity being "sucked out of the system," and that's bad news for crypto too.
AI agents and smart contracts
Pal thinks Bitcoin will miss out on much of the crypto activity AI agents generate. He expects it to flow to Ethereum and Solana as software uses their smart contracts to transact.
Some of the plumbing's already live. Amazon Web Services introduced a feature in June that lets AI agents pay for web content with stablecoins, and Coinbase handles verification and settlement through its x402 protocol (USDC on Base is one of the supported options). Pal said agents could eventually raise operating funds by issuing tokens for projects lasting "a week, a month, a year," then doing the work and generating returns.
ETH vs SOL
Pal isn't ready to call a flip. Multicoin Capital co-founder Kyle Samani predicted on Trade Secrets the previous month that SOL would surpass Ether's market cap "this market cycle." Pal said Samani "needs to hold his horses a little bit," though he acknowledged a flip is possible, and he cited Ethereum's greater concentration of capital as his reason for caution.
On raw activity, the numbers look different. Cointelegraph reported that Solana recorded around 3.2 million active addresses over 24 hours on a Monday, compared with Ethereum's 387,000.
Frequently asked questions
Why does Raoul Pal think a weaker dollar matters for crypto?
Pal told Cointelegraph's Trade Secrets that higher bond yields and the strong dollar are keeping liquidity from flowing freely. He said a weakening US dollar could give crypto the "green light" and help extend the industry's rally.
Why does Pal think Ethereum and Solana benefit more than Bitcoin from AI agents?
Pal said Bitcoin will miss out on much of the crypto economic activity generated by AI agents. He expects that activity to flow to smart contract platforms such as Ethereum and Solana as software uses their smart contracts to transact.
Does Raoul Pal think Solana will overtake Ethereum?
Pal said Multicoin Capital co-founder Kyle Samani "needs to hold his horses a little bit" on his prediction that SOL would surpass Ether's market cap this cycle. He acknowledged a flip is possible but is cautious because of Ethereum's greater concentration of capital.
