Capital is beginning to rotate from artificial intelligence investments back into crypto as enthusiasm around AI occasionally cools. A weaker US dollar could provide a “green light” for further crypto gains, according to Real Vision co-founder and former Goldman Sachs executive Raoul Pal, although current liquidity conditions remain restrictive. Ethereum and Solana could benefit particularly from AI-related activity because both networks support smart contracts.
Crypto waits for liquidity
Speaking on Cointelegraph’s Trade Secrets podcast, Pal said elevated bond yields and the strength of the dollar continue to restrict the flow of liquidity into crypto. He pointed to periods when AI stocks weakened while Bitcoin rallied as evidence of a “rotation for liquidity” between the two markets. Pal would prefer to see the dollar weaken, the gap between long- and short-term interest rates widen and increased bank lending expand the money supply.
Should those conditions fail to materialise, his “second best scenario” is for AI stocks to trade sideways, potentially allowing more capital to move into crypto. An AI market crash would not necessarily help digital assets because it could remove liquidity from the wider financial system. “Things don’t go bust if liquidity is plentiful,” Pal said, warning that crypto could also suffer if the AI boom collapses.
Ethereum and Solana benefit
AI agents could increasingly use Ethereum and Solana to make transactions and interact with smart contracts, potentially driving adoption of both networks. “My guess is they’ll get more adoption over time,” Pal said as AI software becomes more involved in crypto-based economic activity. Solana nevertheless has significant ground to make up before overtaking Ethereum by market capitalisation.
While Solana recently recorded around 3.2 million active addresses compared with Ethereum’s 387,000, Ethereum held roughly $54.4 billion in decentralised-finance deposits against Solana’s $6.7 billion. Pal described Solana’s core activity as “speculation” and said transactions involve smaller amounts. Despite remaining positive about crypto adoption, he has stopped publishing firm price targets, though he said Bitcoin reaching $1 million by 2032 would not concern him.
