Real Vision's Raoul Pal: A weakening US dollar may trigger continued rise in cryptocurrencies, whil

Summary

The rise in cryptocurrencies coincides with a correction in artificial intelligence (AI) stocks. AI proxies may drive transaction volume on Ethereum and Solana. Real Vision founder Raoul Pal observed that liquidity is flowing from AI stocks to the cryptocurrency market. According to Pal, a weaker U.S. dollar may be a catalyst for a continued rebound in the crypto market. Ethereum and Solana may increase network activity due to AI proxy transactions. Pal believes Bitcoin is unlikely to capture significant AI-driven blockchain activity. Pal expressed doubts about Solana's forecast to surpass the market value of Ethereum in this cycle.

Capital rotation: From AI to cryptocurrency

Real Vision founder Raoul Pal believes that liquidity is beginning to flow back from artificial intelligence stocks to the cryptocurrency market. He shared this observation in an interview with Cointelegraph's Trade Secrets program. He pointed out that when Bitcoin rose about 25% to $80,000 at the end of August, Nvidia's shares fell for seven consecutive trading days. This shows that as the AI sector cools down, the cryptocurrency market heats up, and funds are being transferred.

According to Pal analysis, high bond yields and a strong US dollar limit the flow of liquidity in financial markets. He suggested that the weakness of the dollar could become a catalyst for the continued rise of digital assets. "If they can devalue the dollar, then we have the green light for cryptocurrencies to rise further," Pal explained. But he clarified that a comprehensive "green light" signal had not yet been observed across all asset classes.

The US dollar index has been hovering near its 2025 high. At the same time, the U.S. 10-year Treasury yield reached 5.29% in September, and the Federal Reserve implemented a 25 basis point rate hike.

Cryptocurrency gains synchronize with AI stock correction

Bitcoin's recovery in this cycle mainly occurred between August 19 and August 25, during which period, the flagship cryptocurrency surged about 25% to US$80,000. During the same period, artificial intelligence chip maker Nvidia experienced seven consecutive days of stock price decline.

Pal pointed out that whenever AI trading experiences a temporary slowdown, capital tends to flow into cryptocurrencies. He believes this model shows that liquidity remains restricted rather than flowing freely throughout financial markets. However, Pal emphasized that a serious collapse of AI stocks will not benefit the cryptocurrency market. This situation would indicate a loss of liquidity from the entire financial system, creating headwinds for digital assets.

Pal outlines his ideal scenario: a weakening dollar, a steeper yield curve, and expansion of bank lending activity. If this scenario cannot be achieved, his next best choice is to move AI stocks sideways while moving investment capital to the cryptocurrency market.

AI proxies may drive transaction volume in Ethereum and Solana

In June this year, Amazon Cloud Technology (AWS) released a feature that enables AI proxies to use stablecoins to purchase web content. Coinbase facilitates payment verification through its x402 protocol, and USDC on the Base network is one of the supported payment options.

Pal suggests that AI agents may eventually start a financing plan by creating project tokens for a period of one week to twelve months. He believes Ethereum and Solana may experience higher adoption rates as software applications leverage its smart contract infrastructure for transactions. He said Bitcoin was unlikely to capture a large part of this emerging activity.

Pal expressed caution about its forecast that Solana will surpass the market value of Ethereum within this cycle. Kyle Samani, co-founder of Multicoin Capital, said last month that Solana would exceed Ethereum's market value in this market cycle. Pal responded that Samani "needs to calm down a little," while acknowledging that this possibility exists.

According to DefiLlama data, Solana recorded approximately 3.2 million active addresses in 24 hours on Monday, while Ethereum registered 387,000. Ethereum currently has approximately $54.4 billion locked up in the decentralized finance (DeFi) agreement, compared with $6.7 billion for Solana.

Pal explained that he used a metric called "economic density" to evaluate the two networks, which is calculated as the total locked value divided by the number of active users. Under this framework, Solana's activities consist mainly of speculative transactions, with small amounts of capital involved per participant.

Pal revealed that he no longer provides public price forecasts because his forecasts are often circulated on social media without proper context. He described the prediction of Bitcoin reaching a million-dollar mark in 2030 as a "meme", although he did not completely rule out the possibility of it happening in 2032.