Macro expert Raoul Pal discusses cryptocurrencies: AI advances the economic singularity, don't casually get off the train in the next 4 years

Macro master Raoul Pal points out that the AI race will trigger an "economic singularity," with cryptocurrencies as the underlying financial infrastructure of AI holding immense potential. He urges investors to abandon short-term trading and hold high-quality Layer 1 assets for the massive wealth opportunities ahead.

Macro investor and co-founder of Real Vision, Raoul Pal, returns to the "When Shift Happens" podcast to analyze why the AI competition is the largest capital event in human history and why crypto holders are in a favorable position. Raoul Pal explains the concept of the economic singularity, why traders always lose to long-term holders, and why he continues to buy during dips.

PANews has summarized the highlights of the interview.

Host: A few weeks ago, you shared and commented on an interesting video. It satirized that the US stock market has been rising steadily, and as long as you "buy the dip," you can make money. If you don’t have cash, borrow to buy—this isn’t multi-level marketing, it’s a "buy-the-dip" plan. What’s really going on with the stock market?

Raoul Pal: There are mainly two reasons. First, obviously, liquidity—we are witnessing liquidity expansion. The other is that we are experiencing one of the most extraordinary periods in human history; nothing else matters anymore. All capital is flowing into artificial intelligence, the largest race in history. It’s a competition between nations and corporations. Naturally, it will drain every bit of capital because you can’t slow it down.

Host: Tell me about this race.

Raoul Pal: In this world, no one will allow a superpower to monopolize AGI (Artificial General Intelligence), so there must be at least two. Only the US and China can afford this race globally. Game theory shows that no country will stop now, because stopping would mean giving the advantage to the other side. Even if scenarios like OpenAI going bankrupt or running out of funds occur, the US government would immediately auction its assets to companies like Microsoft and Google, never allowing a single company to dominate. The scale of this game is too big; no one will stop. It’s a game of "converting energy units into intelligence units."

Host: It’s too big to fail. So, should we always "buy the dip"? Will there be an end?

Raoul Pal: I wrote in "Global Macro Investor" that it won’t end unless we reach the economic singularity. The economic singularity is when the system can no longer keep pace with technological development. You know that magical formula: population growth + productivity growth + debt growth. When you count AI and robots as part of the population, our current maximum population is 9 billion, but we could reach 18 billion, 100 billion, or even one trillion intelligent agents. If there are 10 billion or 50 billion agents, the economic system can’t function as it used to; it’s operating too fast.

Almost all past technological adoptions followed Metcalfe’s Law (PANews note: the value of a network is proportional to the square of its users), showing logarithmic growth. But AI is the first observed case of Reed’s Law (PANews note: the value of a network increases exponentially with group formation), which is exponential on an exponential scale. It’s estimated that by 2028, the amount of text produced annually by AI will surpass the total text output from Gutenberg’s printing press to today.

Host: Anthropic’s recent interview also said they initially expected a tenfold growth in Q1, but actually grew 80 times. That’s incredible.

Raoul Pal: Yes, the economic singularity occurs when economic agents capable of instant capital formation emerge—that’s the meaning of meme coins: instant capital creation and destruction. They can quickly establish digital businesses, rapidly capture market share, and then exit when opportunities vanish. In this economy, where are the roles for traditional large companies? Who are the workers? The system can no longer operate normally. Because carbon-based biological neurons (humans) operate at 1 millisecond, while now we’re creating intelligence by passing current through silicon (the second most common element on Earth), which is six orders of magnitude faster—one million times. That’s crazy.

Host: Since AI is exploding exponentially, many in crypto are eager to switch to AI, feeling the crypto industry is now dull or even fearing being trapped. How do you view investment choices between AI and cryptocurrencies?

Raoul Pal: Despite the booming AI industry, I still believe that, over the long term, cryptocurrencies remain one of the best risk-return investments. But it’s true that competing with chip companies like NVIDIA is tough because they turn energy into intelligence at the core. However, crypto has an "infinite TAM (Total Addressable Market)." Around October last year, we witnessed the birth of the agent economy (AI Agents). As these agents expand massively, they will have their own wallets and conduct on-chain business. Previously, we estimated the crypto market could reach $100 trillion based on human users; now, with infinite AI agents, the game has changed entirely. Additionally, the Fed will operate the economy like Greenspan did, relying on productivity miracles to reduce debt-to-GDP ratios. The devaluation of fiat currencies will not stop, and the entire financial system is shifting toward blockchain infrastructure, so you only need to front-run institutions. The worst period is over because global liquidity is accelerating.

Host: So, for you, is Bitcoin dropping from recent highs back to $60k not a bear market?

Raoul Pal: That’s just a painful correction within a bull market. I’ve been in crypto since 2013; a 50% retracement for Bitcoin is normal. Other altcoins tend to fall even more, like Solana, which dropped 80% before its last cycle’s surge. The difference is that the 2021 correction was very fast, with a quick rebound; this time, the correction has been more volatile and took months, making it feel very painful. But from another perspective, the longer the consolidation, the longer and larger the bull run afterward.

Host: The issue is that in 2021, the drop was fast and the rise was quick, but this market is turbulent and takes time. Plus, some well-performing companies (like stablecoins, RWA) have no tokens, so retail investors can’t invest, breaking the promise of early wealth.

Raoul Pal: I don’t think that’s true. Product-market fit is king. If your altcoin doesn’t rise, it doesn’t mean the promise is broken; the market owes you nothing. People got used to the easy money in recent years, but liquidity in 2024 is still restrained—we haven’t entered the real "banana zone" (referring to the crazy bullish phase). Although most people can’t buy equity in stablecoin companies, that’s not the point; just hold the underlying Layer 1 tokens. That’s our "universal basic equity." If a large part of future economies is driven by AI and agents using crypto networks, holding Layer 1 tokens allows us to share their success. We didn’t have this opportunity in the internet era, and now there’s no excuse to miss it.

Host: What did you add to your holdings during the recent dip?

Raoul Pal: I bought some Sui and a bit of Zcash. Last year, Zcash surged, but I didn’t chase; during the dip, I started buying. Privacy is valuable as a store of value. It’s a very straightforward "left-side" trade (intuition-based): it’s Bitcoin with privacy features. The "right-side" trade (deliberate trade) considers its resistance to quantum computing. Although this might invite government bans, in the future, it offers a very important defensive property.

Host: Can you explain why smart contract Layer 1s will capture most of the crypto value over time?

Raoul Pal: Layer 1 is the foundational infrastructure at investment grade. Just like the operating system market will eventually be dominated by three or four major players, Layer 1 will converge to 3 to 5 core chains. How to understand the value of Layer 1? If you unplug Ethereum today, the economic value destroyed is enormous: all Layer 2s, DeFi, NFTs, RWAs would go to zero. ETH’s current valuation might even be underestimated. Bitcoin’s function is simple: capturing a share of global savings; but the scalability of smart contract infrastructure is infinite.

Host: Which Layer 1s will win?

Raoul Pal: ETH has the most concentrated economic value and developer intelligence resources (security, network effects, etc.), like Microsoft—buying it is unlikely to be a mistake. Solana has already proven successful; it’s more efficient, faster, and cheaper. Sui, though early, maintained economic density during the 80% market drop, along with ETH and Solana. Sui’s programmability within a single block, processing thousands of transactions per second, and finality speed are on a completely different level. Evaluating blockchains cannot rely on traditional "discounted cash flow (DCF)" models because the network’s purpose is to provide the cheapest, fastest service. Valuing based on transaction fees is nonsense. The cheapest, fastest, most programmable chain will ultimately outperform the market.

Host: Some say DeFi has "died" after recent large-scale hacks. How can traditional finance put money into vulnerable DeFi?

Raoul Pal: But that only pushes development of better products. Just like installing antivirus software on computers, hacking is everywhere. Every bank has teams handling hacks and stolen funds, but they don’t publicize it. I predicted in 2014 that the entire financial infrastructure would shift to blockchain. Why? Because it’s the most efficient energy output method; the financial system will always migrate to the most profitable and efficient track. Moreover, DeFi is actually more suited for machines (AI agents) than humans. Machines don’t even need front-end websites; they can cross multiple chains in milliseconds, using various stablecoins for low-friction asset rebalancing and instant trading. They will be DeFi’s largest user base, and we might not even notice these transactions.

Host: Do you think NFTs will gain huge value due to the wealth effects discussed? I bought Crypto Punks and XCOPY, but their prices are stagnant—I don’t even want to look at them anymore.

Raoul Pal: That’s because NFT activity is a function of the overall crypto economy’s prosperity. You need to wait until the entire crypto market reaches a scale of tens of billions of dollars. When ETH rises from its current level to $5,000 or breaks higher, you’ll see a large revival in NFT activity. Imagine—humanity is experiencing the greatest turning point in history: we will no longer be the top intelligence on Earth, and art will serve as the record of our cultural era. When people make big money in this massive machine economy, they will naturally buy “trophy assets” (PANews note: assets that are extremely scarce, in prime locations, or hold significant cultural or historical value, serving as status symbols and bringing high psychological satisfaction, often "priceless" in the market), just like tech funds, real estate tycoons, and tech magnates.

Host: How do you plan to set up an NFT portfolio? Is only the top-tier "Holy Grail" worth buying?

Raoul Pal: I am actually preparing to launch an NFT fund. Many high-net-worth individuals, family offices, and even OGs who made money in crypto but have never bought digital art don’t know how. Our fund will be divided into two parts: one investing in "Holy Grail" assets (like Alien Punks, XCOPY, Beeple, valued from hundreds of thousands to tens of millions USD), which already have proven social consensus; the other investing in mid-tier but highly convex artists’ works. For example, “Die with the most likes,” humorously and somewhat crudely documenting the decline of the American middle class; or German artist Kim Asendorf, at the forefront of AI art. If these artists’ works are revalued from 20 ETH to 200 ETH (a 5- to 10-fold increase), and ETH itself might rise tenfold, you could see a 100-fold double return.

Don’t worry about ordinary NFTs; the entire industry is still small, and everything will be re-priced. Even buying a common Punk from the same series can be a good deal. Additionally, our fund will also engage in NFT collateralized lending, earning over 15% yields, and reinvesting to support the liquidity of the entire art ecosystem.

Host: Is Bitcoin an investment proxy for AI?

Raoul Pal: You could say so, because AI will boost economic growth, and the massive debt-driven fiat devaluation benefits Bitcoin as a store of digital value. But Layer 1 smart contract platforms are a better, more direct bet.

Host: You say everyone is too focused on cycles; the big picture is clear: unless urgent, you should never sell.

Raoul Pal: Exactly. In this era of Agents, continuous fiat devaluation, and everything on-chain, why sell? If we understand the long-term direction of market cap, why sell? This is humanity’s retirement plan. The economic singularity is about four years away; you have four years to hold these assets as much as possible—they can carry you through the greatest uncertainties ahead.

Host: Can you prove with data that "buy and hold" beats those trying to trade swings?

Raoul Pal: Absolutely. I’ve modeled it. If it reaches 1 to 2 standard deviations below the logarithmic trend channel in oversold territory, buy and do nothing—compound interest is astonishing. If you try to sell at the top and buy back at the bottom, 99% of people can’t do it; it’s too hard. People tend to chase highs during rallies. I’ve been in this industry for 35 years; I don’t know anyone who can consistently profit from short-term trading. Those who make big money are actually earning management fees.

In fact, the biggest earners in crypto are those who do nothing. Why are the accounts of major brokerages often "dead accounts" (forgotten accounts)? Retailers try to buy high and sell low, but not only do they fail, they waste emotional and mental energy—getting angry or euphoric over price swings is the least efficient use of personal energy. If you have spare productive energy, study AI, and hold your Bitcoin tightly. If the price is overbought by two standard deviations, sell a little to enjoy life; otherwise, shut up, buy the dip, and hold patiently.

Host: How should people maintain confidence when their portfolios drop 60-80% and stay down for months?

Raoul Pal: I don’t care. I live off my salary. If I have spare cash and the market is severely oversold, I keep buying. My core logic remains: tomorrow will be more digital than today.

Host: Now AI stocks are surging, many charts are going straight up. Will this attract people away from boring crypto into AI?

Raoul Pal: Your job is to be a mercenary for your own capital—wherever it makes money, go there. But I believe the compound returns of crypto are higher. Compared to Nasdaq, Bitcoin is currently in a severely oversold position within its long-term trend. This means, relative to Nasdaq, you should allocate more to crypto now.

Host: Finally, give us some optimistic outlook for 2026–2027 to boost morale.

Raoul Pal: There are many good news signals. First, banks are entering; stablecoins will explode in growth over the next two years. The "Clarity Act" will be signed into law, allowing almost everyone to build on blockchain. On the macro level, the US government has trillions of dollars in interest to roll over and pay; they must keep printing money, and global liquidity will increase. The business cycle remains strong, with more income flowing into speculative assets. Most importantly, current crypto assets are at their cheapest point in a long-term logarithmic upward trend compared to assets like Nasdaq. We’ve also experienced the longest and lowest "extreme fear" period in history (Fear & Greed Index below 10), and the Middle East war may be permanently resolved. It’s a perfect storm bullish setup. I see a 70% probability for this optimistic scenario, with the remaining 30% risk mainly from unresolved Middle East conflicts causing inflation and liquidity tightening, but I see no signs of that yet.

• This article is authorized reprint from: 《PA News》
• Original title: 《Macro Master Raoul Pal Interview: The Economic Singularity Is Approaching, Don’t Leave Too Soon in the Next Four Years》
• Original author: Felix