Source: "When Shift Happens", Youtube
Compiled by: Felix, PANews
Real Vision CEO Raoul Pal shares his framework for succeeding in the cryptocurrency field by 2026 without relying on luck: hold the right assets, then do nothing. Below are the highlights of the interview from the "When Shift Happens" podcast, compiled by PANews.
Kevin: I recently went to Silicon Valley and talked to many people, which reinforced my long-term perspective. Today we're discussing this because I think it's important. People must understand, but either they don't or they don't want to. A lot of people's anger comes from a mismatch in time horizons.
Raoul Pal: It's like you can tell them the direction of the future. The adoption of technology won't stop. The market size has now reached over three trillion dollars and will eventually reach 100 trillion dollars. So, we've only gone 3%, and I estimate this might take about 10 years. This is a long-term shift, but everyone asks, "What about today?".
Kevin: How do you respond to the trolls? I see people saying you always use "look at the long term" as an excuse, pulling this out when things are bad short-term. How do you respond to these people?
Raoul Pal: The short term is mostly noise, while the long term is driven by two key factors: network adoption and money printing, so the long term is more predictable. The short term always deviates from the long term, and people don't want to accept that. Everyone pins their hopes on the M2 chart. I said it wouldn't be a perfect match, but people understood it as always being a perfect fit. When it deviates, they say I'm wrong. My job as a macro analyst is to figure out why it deviated and what changed. For example, this time liquidity was drained by the Treasury General Account, plus the government shutdown. People don't understand; they think everything should fit perfectly, but it's impossible. The short term is always far more noise than signal, and focusing on the long term is the only way to see the signal clearly.
Kevin: I see a lot of smart people, especially former traditional finance traders, now saying the crypto market is maturing, with more institutions and professional traders using technologies like AI. There's almost no alpha left in the market besides long-term investing. So, basically, all you can do is buy and hold like a regular investor or trader, betting on the long-term trend you mentioned.
Raoul Pal: I've seen this before. In 2004, I left the hedge fund industry for this reason. In 2004, I was doing macro strategies. Macro strategies are more volatile and are long-term strategies because macro means you are essentially trading around macroeconomic forces and economic power. Now, there's only one ISM data point per quarter, or one GDP data point per month. So, to truly form a trend, you need a series of data over a period of time. That means a trading cycle of at least 6 months, maybe shortened to 3 months at turning points, but it's usually 18 months to 3 years. That's the nature of macroeconomics.
Later I realized that as new investors flooded into the hedge fund investment space, they forced everyone to mark-to-market monthly, and then judged you based on how much you were up or down that month, not on your performance for the year or how the trade ultimately performed. Whether the stock you bought went up or down, if the price pulled back in that month and you were still profitable, you were supposed to close the position. I thought, you can't make money like this. This approach kills market volatility and reduces everyone's returns. The crypto space is now facing the same problem. It's even worse in macroeconomics because of the rise of systematic funds, high-frequency trading, etc. Macro lost its edge for short-term trading. I left macro and founded Global Macro Investor (GMI) to prove that long-term investing is the way to go.
Kevin: This is especially difficult for the ADHD (Attention Deficit Hyperactivity Disorder) generation.
Raoul Pal: Yes, they feel everything is like a video game.
Kevin: 2025 has been quite difficult for crypto investors. Unless you invested in a few specific correct tokens, the performance has been average. Why?
Raoul Pal: Because of liquidity. Liquidity is the most important macro factor right now. It's a game. The first game is liquidity game. The second game we overlay in crypto is, what is the adoption rate of the specific token asset you bought? Whether it's L1, L2, application layer, DeFi, or something else, the key is the speed of adoption and how much it depreciates. This is the entire game we are in. So people need to figure out the entirety of this game. Then things get a bit complicated. How do you get liquidity?
In traditional crypto terms, liquidity refers to quantitative easing. They were printing money before, but now they've stopped. Then you have to figure out the Fed's net liquidity, which is the Treasury General Account and reverse repo operations. This used to be the only source of liquidity in the system, but they drained the reverse repo funds. The Treasury General Account is like a checking account; they keep topping it up, emptying it, topping it up, emptying it. So the balance of this account fluctuates constantly. Actually, it doesn't help liquidity. The liquidity we saw was essentially the draining of reverse repo funds. Therefore, the rate of change in liquidity has been low. This is one factor.
Also, the cycle has lengthened. Some say there is a four-year cycle, and there is. But there's a reason. After 2008, interest rates went to zero, countries structured their debt with 3-5 year maturities, rolling over debt every four years. In 2021-2022, interest rates went to zero again, they lengthened the debt duration to 5 years. So the money printing that was supposed to happen in the fourth year was pushed to the fifth year, which is 2026. 10 trillion in debt needs to roll over, so 2026 is when big liquidity is needed. But now there are too many tokens; liquidity can't save all projects. Before, anything you bought would go up; now it doesn't.
Kevin: Yes, many tokens will lose money even with more liquidity because they are bad investments.
Raoul Pal: Right, no one uses them. A few can become memes, but it's hard to last. What people don't understand is that there is also a risk curve among mainstream tokens. Bitcoin pulls back 30%, Ethereum pulls back 40%, Solana pulls back 50%, SUI pulls back 60-65%, depending on their maturity, user base, and market depth. The core of my "DTFU" (Don’t Fuck This Up) framework is not to make the most money, but to not lose too much, and then compound long-term. It sounds boring, but that's the truth.
Kevin: What does "minimum regret portfolio" mean?
Raoul Pal: It means looking back and not feeling stupid. L1s are the simplest, those with enough size and adoption won't go to zero in one cycle. They might "bleed" slowly, but won't go to zero instantly. Then you need to check if you are blindly following the trend. ChatGPT is free now; you can query on-chain metrics, user growth, etc.
Kevin: Is ChatGPT's analysis of on-chain metrics reliable?
Raoul Pal: I wrote an article about Metastas last week, using stablecoin transfer value / active users for valuation. ChatGPT itself proposed using five metrics like DeFi, gaming, etc., to define active users, then ranked the chains based on these metrics to see which chains are overvalued and which are undervalued. It gives you a pretty good judgment; it does a good job in almost all aspects. It's also very good at interpreting technical charts. You can give it a chart and ask what it thinks, and it will give you a decent result.
Kevin: Do you follow your own "DTFU" investment framework?
Raoul Pal: Basically yes, but my positions are more concentrated. When people hear I'm concentrated, they think they should be too. I'm concentrated because I built the valuation model myself. It's very likely I will adjust it at some point. Its volatility is greater; it's designed for greater volatility because it's an early-stage network adoption model. So, its downside volatility is greater than its upside volatility.
I was selling tokens like crazy the past two weeks, then suddenly woke up this morning and SUI is up 20-30%, others up 8%. I can accept that; others might not understand. Besides that, I have other businesses that generate cash flow, which allows me to allocate assets correctly, and I take on more risk because I've done more homework. But this doesn't mean my judgment is necessarily correct. Others should not listen to my asset allocation advice; listen to the overall trading principles. Never borrow someone else's conviction. That is the most important thing.
Kevin: Is it possible that you underperform those who follow your "DTFU" advice?
Raoul Pal: Of course. I am only responsible for my own capital. If I'm wrong, I bear it myself. My direction is roughly correct.
Kevin: I saw a tweet: a girlfriend has been DCAing into ETH and BTC since 2019, doesn't look at Twitter or follow anything, and has significantly outperformed her boyfriend. The best performing brokerage accounts are often those of clients who have "passed away".
Raoul Pal: Yes. So we always come back to the beginning. Most people are in pain now because they are stagnant or losing money in this cycle because they didn't buy heavily at the lows, and that's hard to do. The simplest way to get rich is to always DCA into BTC, which has better returns than DCAing into the S&P 500. But this is not the real way to make money in crypto, but I think a better way is to wait for the market to fall X%, say 30% or more, and then perform dollar-cost averaging at three times the frequency when the market hits new highs. This way, the compound returns will definitely be better. It's not hard to do.
Kevin: It's psychologically difficult. I buy Bitcoin every month, always feeling it's more likely to go up, but end up buying at local tops.
Raoul Pal: I bought SUI three weeks ago, and it fell a lot later. But over time, you forget the entry price, unless it's a major bottom.
Kevin: Do you collect tweets that abuse you?
Raoul Pal: No, but I read tweets that骂 me on the "Drinks with Raoul" show. It's good therapy. It also reminds me where I wasn't clear.
Kevin: Many early believers who came in from 2017-2021 are now switching to AI, saying crypto hasn't fulfilled its decentralization promise, only ETFs and stable币, and are very disappointed. But I think they actually didn't make quick money these years and lost their edge. It's completely the opposite in Silicon Valley; they say the big returns are still ahead. Electric Capital's Aishal compares crypto to more liquid venture capital. Most VCs will go to zero, a few are very profitable, but you have to hold them forever because exponential things eventually scale beyond imagination.
Raoul Pal: VCs get in before token generation, at lower valuations. Buying in the public market, the power law isn't as strong; price is important. I tried a broad portfolio last cycle; most returns still came from ETH, BTC, a bit of Solana; the rest were basically useless. The market size is now about 3.5 trillion dollars, conservatively estimated to reach 100 trillion in 10 years; we've only reached 3%. Bitcoin's dominance will decline, smart contract dominance will rise because their use cases will be more. The entire market still has 30 times upside potential.
Kevin: Silicon Valley understands exponential growth, Wall Street understands linear and mean reversion. So every bull and bear market they think the market is finished. Actually, looking long-term, it's a smooth trend. Amazon, Google, Tesla were all the same. High volatility early on,变小 after maturity. What does your portfolio look like now?
Raoul Pal: Besides buying some SUI three weeks ago, I haven't moved anything else. Bought some NFTs. People will screenshot and say I'm shilling SUI, then someone will骂骗子. My allocation is my business. I beg you not to copy my risk appetite. I just want to say, do it according to your own risk tolerance.
Kevin: Your real thoughts on SUI by the end of 2025?
Raoul Pal: Its performance on the risk curve is normal. It underperformed Solana short-term but is still in an uptrend. The project's technology is fine; the key is whether it can gain adoption. User growth is faster than Solana's last cycle, value/active user is high. The model shows it's about 80% undervalued compared to Solana. Still needs the overall market to rise to verify.
Kevin: How do you allocate your income monthly now?
Raoul Pal: Cash flow is used for investment, living, and various expenses. Like everything else. Besides cryptocurrency, I also invest in other things, like a lot of digital art. As your funds grow, you want to update some things. So you change your音响, change your car, etc. You do this to maintain the quality of your assets because if you don't, the quality of your assets declines over time, like cars break down, age, become annoying, need constant repair.
I like to spend money on vacations and travel. That's quality of life. Quality of life itself is an investment; it gives you experiences. So, I invest a lot in that.
Kevin: You mentioned digital art,也就是 NFTs. How are NFTs doing now?
Raoul Pal: Art Basel is going on, half the digital art market is there. Although a lot of the art they create isn't actually digital. The situation now is, once the price of ETH or Solana reaches the upper end of the range, sales explode again because people start recycling wealth to buy art. When the price falls back to the bottom of the range, no one has money to buy because the opportunity cost of putting liquid funds into non-monetary assets decreases. But this argument suggests that whenever the price peaks, art becomes the focus, and prices start hitting new highs.
We've already started to see some big-name investors enter this space. Ribbit Capital's Nikki Mala acquired the Punks IP and Crypto Punks IP; there are other investors, like Alan Howard, who is a big investor in this space. The overall value of art is rising, but it still fluctuates with crypto prices. So the price will drop slightly, but in the long run, it tends to outperform, and more things will emerge in this field.
Kevin: Animoka's co-founder Yuge Yatsu recently said NFTs are this generation's asset class. I think most people would think, "What the hell? Is he fooling himself? Is he in denial?", my question is, does he understand something that most people still don't?
Raoul Pal: Yes. Everyone thinks things like Monkey JPEGs have depreciated. It's really stupid speculation. People don't realize that cryptocurrency is extremely speculative, and through extremely speculative means, it accelerates the validation of an idea. And the speculation has proven that the value of digital assets is not just in being exchange tokens. So, we have Crypto Punks, their total value reached 10 billion dollars. Gaming assets, ticketing, financial contracts, digital identity... TAM is huge. The most expensive block space is art. Everything in the digital world can go to zero, only digital scarcity preserves value. Wealth ultimately flows to art.
Kevin: You posted in early November saying "buy the dip". Is that still your advice now in December 2025?
Raoul Pal: Yes. I think the market has bottomed. So we experienced the October liquidation. The US government extracted liquidity through the Treasury General Account, then they shut down the government, now liquidity is gone because they can't even use the Treasury General Account. Cryptocurrency, as the most liquidity-sensitive asset, its liquidity plummeted, exposing all the weaknesses of leverage, triggering systemic liquidation of leverage and a series of problems.
If all my research on liquidity is correct, a wave of liquidity influx is coming. The system now tells us the banking system is tight on funds, which causes frequent fluctuations in the money market. There is not enough money in the market. The Fed knows this too. They stopped quantitative tightening. But they have another task, which is to complete the year-end financing work. Banks don't have enough liquidity to roll over debt and adjust balance sheets. Therefore, the Fed must inject some liquidity.
Kevin: How to get rich in cryptocurrency in 2026?
Raoul Pal: Hold the right assets and do nothing. Don't borrow others' beliefs; do your own homework to establish your own beliefs. Set your time frame according to your risk tolerance and goals. My framework is a 5-year cycle; everything else is noise.
Kevin: What is something you hold onto but know you should let go of?
Raoul Pal: The feeling that I can help more people. But have to let it go because some people don't want help. It's frustrating. You are also desperately trying to help everyone, but many people desperately don't want to be helped.
Kevin: What does the voice in your head say when you wake up in the morning and before you go to bed at night?
Raoul Pal: Keep going. My job is to live in the future and see the path clearly. Don't worry too much about trivial matters. The general direction is right. Don't care if SUI falls 30% this week; care that the entire market will reach 100 trillion dollars.
Related reading: Dialogue with Polygon Founder: Escaping Poverty and Building a $30 Billion Crypto Company
