Top analyst Raoul Pal sees money shifting from AI to crypto

The crypto market has gained ground again in recent months, but the conditions are not yet ideal, according to macro investor Raoul Pal. The founder of Real Vision does see signs that investors are starting to distribute their money differently. According to him, a break in the strong rise of AI shares in particular can become important for crypto.

According to Pal, the market is currently slowed by the strong US dollar and the high interest rates on US government bonds. As a result, less liquidity is available for risky investments such as crypto.

A weaker dollar could change that. “If they can get the dollar down, we will get the green light for a further rise in crypto,” says Pal. Nevertheless, he does not want to anticipate this too early.

Pal also sees that AI shares and crypto are currently competing for the same capital. When the artificial intelligence rally temporarily cools, some of that money may shift toward crypto, according to him.

According to him, this already happened in August. Bitcoin (BTC) rose by about 25 percent to $80,000 between August 19 and 25. At the same time, Nvidia declined seven trading days in a row.

According to Pal, a major crash in AI shares would be bad news. Such a decline may indicate that liquidity is disappearing from the financial markets. That would also worsen the conditions for crypto.

Pal prefers AI shares to move sideways for a period of time. In that scenario, according to him, capital can gradually shift to other markets.

His preference is for a combination of a weaker dollar, a steeper yield curve and banks lending more money. At this time, conditions are not yet fully moving in that direction. The US ten-year interest rate rose to 5.29 percent in September.

In the longer term, Pal also sees an important role for AI agents. Such software can make increasingly independent payments and use smart contracts.

According to him, Ethereum (ETH) and Solana (SOL) in particular could benefit from this. For example, AI agents can use stablecoins to pay for online services on their own.

“I expect its use will continue to increase as AI uses these networks more often,” says Pal.

He remains cautious about a possible battle between Ethereum and Solana. Solana has more active addresses, but Ethereum has significantly more capital in DeFi protocols. According to Pal, a lot of activity on Solana is also about speculation with relatively small amounts.

He expects to see less Bitcoin in the economic activity around AI agents.