AI Just Unlocked Crypto’s Infinity Glitch! | Raoul Pal

Raoul Pal (0:00)

The tam of crypto has gone to infinity, and people don't understand it. AI is the most powerful technology we've ever discovered. We're now putting electricity through sand and generating superintelligence, it's fucking bananas. This new wave of digital immigrants, AI and robots. And then in five years time, there's billions of economic Asians who are transacting and doing economic activity. The agentic economy needs a coordination layer for value. Blockchains really aren't built for humans in the end, when you look at it. Whole economic coordination for the new internet, blockchain is pretty well suited for it. Once you have an agent acting on your behalf, you need it. You can't do it without it. Eventually, we'll have Asians building their own businesses, using crypto markets to raise capital, and we won't even see it. But the largest marketplace in history won't be companies, it'll be data that agents will be going and buying.

Ran (0:49)

If you lose this race, even if you lose just a few months in this race, you're never catching up.

Raoul Pal (0:53)

Not any of you never catching up. You've lost control over the planet and beyond. It's a whole new world that's coming. It's a whole new hidden economy that's coming. By about 2030, when we get to this point of the economic singularity, I think that's when it starts to get just a bit fucking weird.

Ran (1:08)

Well, how does this end?

Raoul Pal (1:09)

The answer here is going to be...

Ran (1:14)

Okay, so without any further ado, I'm going to get Raoul on the show. Raoul, good to see you, my friend.

Raoul Pal (1:19)

Always good to see you.

Ran (1:21)

Especially in the beginning of the bull market, I think now everyone's convinced finally that we're in the bull market.

It was quite a road to get everyone to believe the bull market had finally started. I think now everyone believes we're in a bull market. I think that the thing that people are not united by is what's actually going to drive this bull market. That's what I think people aren't united by. And I read this...

Raoul Pal (1:43)

Also, because we're all convinced, we have to have a leverage flush out first, right? At some point soon, we'll have to have a quick leverage flush and then we can really get going.

Ran (1:53)

You know, this is one of the... I think this is going back to... I think this is one of those bull markets that actually fooled everybody, because everybody was waiting for that end of the four-year cycle and that one last dip. I think a lot of people were fooled and didn't catch the way up. And now you've got a whole lot of... A lot of them were waiting and waiting and waiting on the sidelines. And now you've got this whole like firmware buying, which I kind of think was the reason for getting this next shift up.

Raoul Pal (2:16)

I never believed that this was a full cycle.

I still maintain that this was a mid-cycle fall and not a full cycle. And it was more akin to 2019, 2020, where we then fell and then started from there.

Ran (2:37)

Why do you think Bitcoin lagged, like things like the NASDAQ and risk assets and stuff like that? What do you think the reason why they were going up and they were all getting fueled by the AI pump and Bitcoin was kind of like moving sideways, doing anything? In fact, if you look at the chart here, from February all the way to August, we did nothing.

Raoul Pal (2:57)

So two things, obviously, 1010 broke something, right? Something happened within that that we never really found out. But after that, it was really a matter of liquidity was not enough. So liquidity has been growing in the US, but it hasn't been super strong. So if you look at excess liquidity, liquidity growth in excess of GDP growth, it's barely been positive. And most of the time, it's been slightly negative, which means you don't have more speculative capital. So you had one thing to fund, which was the AI, and there wasn't enough capital for anything else.

So now what we've seen is AI has paused and crypto has gone because there's still not excess liquidity around. So once you get all the liquidity spigots open, we've had a bloody Iran war, we've had the dollar rallying, we've had rates going up, we've had the government shutdowns, we've had one thing after another. So that's why liquidity has not been there in full force.

So now we've got a rotation, but the next phase has to be more liquidity, and then everything can go up.