Raoul Pal's 2026 crypto thesis: liquidity and the end of the four-year cycle

Transcript

But we've been gifted an asset class which is the greatest performing asset class in all recorded history. What's up everybody? It's LG Ducet here and welcome to the Milkro Show, the daily crypto show for people who don't want to screw up a once in a generation market. Today is January 27th, 2026. The crypto market cap is sitting just below $3 trillion, a little lower than we would like. I heard something recently on a podcast that made my hair curl. The voice said, "You only have until 2030 to make as much money as you possibly can before the economic singularity kicks in." And I haven't been able to stop thinking about it since. That voice belonged to Raul Pal, one of the smartest investors in crypto and the man who keeps warning us that we'd better not [ __ ] up this next part. And today,

he's my guest on the podcast. Today's episode is brought to you by Bridge. Send stablecoin payments instantly. Simple, global, friction free, and chain link links Web 3 to Wall Street. Raul, welcome to Milk Road, man. >> Uh, I'm happy to be here. Thank you for having me on. >> We are very excited to talk to you. We have so much to go through today, so we're just going to dive right into it. Raul, you have one of the most compelling thesises for 2026 and how we should be now, if not very soon, absolutely flying. Tell us about that thesis and why 2026 is going to be a big year. >> Yeah, so my whole framework is built on something I call the everything code.

And the everything code was the understanding that global liquidity is the key driver. People have caught on to this over time, but global liquidity explains 90% of the moves in Bitcoin. So, let's talk about liquidity. Last year was a year where everyone was, including myself, was expecting more liquidity. It tends to come in seasonal phases. Liquidity is generally being used to debase the currency to pay for the debts and particularly the rolling of this massive debt load. That had been a four-year cycle. And then last year it started we didn't see the pick up in liquidity we're expecting and that led me to try and understand what was going on why it why it had changed versus my

forecast and I realized that the debts had been extended by another year so therefore the cycle was probably a 5year cycle okay so that gave us an understanding we should should have still had a good end to the year normally you know Q4 is good in crypto or at least November December is and it wasn't It was the opposite happened and that was based on again liquidity because we had the government shutdown and the government shutdown well it first started in July where the Federal Reserve planning for the potential shutdown started rebuilding what's known as the Treasury General Account. That's their checking account. When they do that they're taking money out of the system.

It used to be offset by something called the reverse repo which they've been draining over the last two years. and that was empty. So you had a slightly outsized effect. Also, Chinese liquidity hadn't picked up yet. So we had this liquidity air pocket. Okay, that's pretty normal. These things happen. Then we had the shutdown. Nobody expected the longest shutdown in history. Certainly I didn't. And what you got was a decoupling of crypto, which is the furthest end of the risk curve because it it got hit by this lack of liquidity because nobody could spend any money in the government. So liquidity wasn't there. that caused October the 10th.

October the 10th was a cryptospecific event where everything broke basically on Binance and a few of the Asian exchanges and everybody got liquidated. The largest liquidation event in history and the market has not recovered from that yet. There's a bunch of thesis why it hasn't recovered yet, but it's repairing itself, which is why we've had this choppy sideways price action for a long time while other assets have been screaming to new highs. So, does it mean that it's over and the four-ear cycle's over?

No, because we can actually forecast liquidity. We do it a number of ways. One is look at financial conditions. They're weakening and the dollar at a new low for this cycle today is a huge indicator that financial conditions are weakening. Bond yields over time have been either stable or trending lower. That's another input to liquidity. Commodity prices starting to pick up which is a slight offset. But generally speaking, financial conditions are improving. That leads global liquidity and that in itself leads market prices.

So looking at global liquidity, we know it's going to go up. We also know that the interest payments on the debt are still going vertical. So we can tell how much they have to roll. And they've got about 8 trillion to roll this year. So somehow you need to find 8 trillion. So what we've seen is a battle between the central bank and the government. basically the rights to who debases the currency because if the central bank does it, they're not necessarily going to do what the government needs to issue more debt because the government wants to spend money, give fiscal stimuluses, do what it wants to do. And the Federal Reserve will say, well, inflation and unemployment, we're not going to do

that. So, what we've just seen is the start of a regime change and it's always comes in these little three or four letter acronyms that nobody understands. And this was the ESLR. Oh, they've changed the requirements on the ESLR means nothing. Actually, it's the risk weighting of government bonds in bank balance sheets. And what it means is after 2008, they became very strict about how much leverage banks could take under this thing called the Barasel 3 Accord. This is part of that. But if you change the risk waiting, it automatically allows the banks to absorb more bonds from the government so they can issue more and

the banks buy them directly. So you're not waiting for the Chinese to buy them or the Japanese or the Europeans or whatever. So that's that was part of the smoker mirrors. The other thing is what happens is they the banks use leverage and create more liquidity. Banks can create money too. and that this process allows them to take more risk, add more leverage. So, okay, so this is the way they're going to start financing this. We've got another a bunch of other measures coming through, but that's the main one. In addition, what this does, it picks up the business cycle. We've seen this K-shaped economy where Main Street is in basically in recession or near near

uh as damage to a recession while Wall Street's had a boom. And that's because the ISM, the business cycle, the Institute of Supply Managers survey is still below 50. So they know they want to win an election. They need Main Street to feel like it's got money and it's feeling like the economy is growing. So when you give the banks the ability to leverage up, they'll lend it to small businesses. They'll create economic activity, which central banks don't create economic activity. They just debase the currency by using the balance sheet. But the banks debase the currency and create economic activity.

That's why they're doing this. So we've got this thing where economic growth is going to get stimulated via fiscal stimulus, bank leverage, plus what's happening in AI and also the building of data centers, the whole infrastructure buildout, all of this. And then on top, they've allowed for the debasement of currency to happen, which increases liquidity. So, by all accounts, all of those measures tell you that 2026 should be a good year. But then everybody in our markets, sorry this is a long siloquy, but there's important points to get across is everybody in our markets looks across at gold and silver and go, "What the [ __ ] man? We're supposed to be, this is supposed to be our party."

But you see, gold actually mirrors financial conditions. So, it leads and has done for the last eight or 10 years. It leads crypto. So it is mirroring these financial conditions which are loosened and eventually crypto plays catch-up. There's still a bit of a dislocation between crypto prices and global liquidity because of what happened in 1010. But when you look at all of this, the probability is that those alligator jaws, the difference between let's say global M2 and um crypto or gold and crypto with the lag, all of this all close. Um, so that's what I think is about to happen. We've only got one more problem in the way. There's always a

problem, which is can we get another government shutdown? It'll be a partial shutdown, but the market doesn't like that either. So, we need to get through these things and then before you know it, the whole thing is going to be how do the Republicans win the election and therefore how do they print money? But it's also not a US game. So, the Chinese are already accelerating their printing of money. The Europeans aren't doing much and the Japanese are doing a different game which is stimulating growth. But netn net it probabilistically speaking this should be a very good year. If you're loving this chat with Raul and you want to know how we are playing the 2030 thesis that's milkro all access. You'll get a 30-day free trial and 30% off. The link is below or you can head to

milkroad.com/2030. It's an excellent thesis man. You summed it all up. That's that's that's the whole macro picture in a nutshell and I think it's a wonderful way to look at it. Um Ro, I'm going to throw a couple kind of challenges at that if you may. Um do you feel like 1010 caused maybe everlasting psychological damage in the market? Man, that was the biggest crypto liquidation ever. Um and you know, like you're saying, it's like a lot of people in our community are like, "Forget it, man. We're in a bare market. Just just go home for a while." Yet, you know, you're here being like, "No, no, no. You this this is it. You got to be ready now."

>> So, we've had similar in the equity market. It was called the flash crash in 2014, I think it was. And big stocks traded down 80% in like 3 minutes. Exactly the same mechanism. And there was a break in the market. Did that stop the equity bull market? No. Did it take a while to digest the mess? Yes. They had to cancel a bunch of trades and you know, a lot of people had lost money in it. It's just takes a while. Now, why does it take a while? So this is my thesis on it. It could be dead wrong. Let's assume the core of what happened happened on Binance and it was the Athena peg breaking cuz they

referenced it differently. Whatever the mechanism was in the end, even the APIs to the market makers broke. So there was no prices able to be made. So everything just hitting stop losses, hitting exchange liquidations in um per gets liquidated, but there's no buyer because the market makers weren't able to put prices in. Nor were we. Remember, everyone was trying to buy. You couldn't get a single price in. But everything was being automated, automatically liquidated. My view is the exchanges Binance and others had to step in with their own balance sheets to stop the market completely going to zero through their own you know the failure of their

own platform. So let's say a big buyer people thought it was the market makers. I think the market makers actually got quite impaired by this. But let's say Binance has to chuck in and again I don't know if I'm right, but let's say they had to chuck in $10 billion to to absorb all of that selling. Okay, now they got $10 billion of inventory. They have a big shareholder in Abu Dhabi who, you know, they they need to be careful what they report and stuff like that. So, okay, they've done this. What do they need to do? They'll need to offload the risk. But you've got a bunch of [ __ ] coins. You got a bunch of everything in that. And some of this stuff is not liquid at all. And you've

taken out a bunch of retail investors and broken their hopes and dreams. So, it's going to take a while for them to try and sell that and repair their own balance sheet. They probably didn't lose money from it. They're smart enough to figure out how to get out of risk over time, but I think they had a lot of risk that they had to absorb. And that's what's kept everything kept everything held back over this period is this and we saw it every day we'd see this selling. Um and that is coming I think from from this whole situation. >> How do you see retail coming back at this point in time?

>> Retail is driven by the fastest possible returns. If you go with the thesis that most retail investors, the Robin Hood crowd and the Coinbase crowd, they're generally in their 20s and 30s, they generally can't afford a house. They're generally working two or three jobs and they're looking for a way out. And so they will speculate. They're also a gaming generation. So losing your life is not the end of the world because you lose it in games and you start again, right?

They grew up on gaming. So, it's a risk-taking culture >> and it's a logical risk-taking culture when there's no way of getting out of the trap unless you take risk. So, they just move where the returns are. So, they're all on Robin Hood trading options on Palunteer and tech stocks and then gold and silver start going, they start trading that. So if the returns start coming back to crypto and we know that over time crypto's outperformed. I posted a chart on X recently about the gold crypto ratio. I mean I mean since 2020 I think crypto uh Bitcoin's outperformed gold by 87 and a half%.

So as soon as crypto starts moving it has that super massive black hole effect because it outperforms everything and it just sucks in capital. So they will be back. They didn't leave crypto forever. they just lost their stake at the casino and if they've got a stake they went elsewhere to the different casino and they'll come back to whatever casino pays the best odds >> and hopefully they come back and and liquidate their profits on other things to come and buy crypto right if you're already up on gold maybe you you'll want some of this >> that's right and you know we had a real vision crypto gathering in Miami last weekend amazing how much conversation was about gold and silver >> and tech stocks at a crypto gathering so you can see that these people are moving around for returns and that makes sense

of So they don't have to be loyal to one asset. You have to loyal to your own returns. >> Raul, how do you find um I guess you have a fantastic thesis so this kind of works, but I want to dig into this, you know, Bitcoin will catch up to gold idea, right? Because we see that ratio, we see the chart, the gold to Bitcoin ratio. It's it's the lowest it can possibly be. You're telling me that basically gold typically frontr runs Bitcoin. So is that is that the main thesis for this or is it a the is the macro play really the reason for Bitcoin to move up from here? >> Gold is coincidental to financial conditions. So really I'm using the macro framework of financial conditions leads liquidity. Financial conditions is there as the debasement of as the lead into the need for debasement of currency

via liquidity that's driven by the interest payments on the debt and the debt that needs to be rolled. So it's all a macro thesis that rolls down through asset classes and it rolls down according to the business cycle where you've got some assets that lead some lag. Gold leads currently. So it's not about gold, it's about the business cycle. Gold is just an easy way of looking at it. And in fact, if you put the charts of Bitcoin and gold with a uh I think it's a 180day roughly uh lag, they actually match up very well. But what you found is you've got this slight alligator jaws and the alligator jaws is the impairment of the market that's only in crypto.

So therefore, it's a temporary state of affairs most likely. And you see if the market starts performing better again, almost everybody in crypto is underweight now because yeah, half the market thinks the the bare market's in play and the cycle's done. And if the market starts ripping from here, everybody's kind of underweight, so they'll they'll chase it. >> I'm going to play devil's advocate one more time before we move on. Talk about 2030, 5 year cycle. What would be the first signal that you're wrong about the 5-year thesis?

I really think that unless there's something extraordinary, another government shut down and it's something extraordinary happens really by the end of next month, we should start seeing much higher crypto prices. You know, it's coming to that point now because if you think the elections in November, they have to get the ISM from 47 to like 55 or 57 in the shortest period of time. They're going to give out massive fiscal stimuluses.

They're giving t tax breaks and they're giving the banks the ability to use more le leverage. that should start flowing unless unless something is astray here. Now, could it be something to do with the tariff thing? Possibly. You know, there's always something that can go wrong. There's nothing as a certainty. Everything is a probability and there's always an unknown that comes into play. Could be a positive unknown, could be a negative unknown. You know, the flip side of that, we've got the stabil the stability act. Does that get put through? We don't know. I mean, last week I had a call with some of the people in the US government and they're like, "If we don't get this through now, it's not going to go through for six years." And you know, we're not sure we

can get the Democrats across the line. Next minute you hear it's it's close. So I don't know where we are but if that comes through you know the guys from Bitwise have talked about this it unleashes a lot of capital because it really gives clarity on what is what and a lot of people particularly the banks and the asset management firms who are creating product in the space really need to know this. >> The guys from Bitwise are back on on Thursday for anybody listening who wants to listen to that episode. They join us pretty often. >> Great guys. Those guys >> Matt is on. Matt and Rin are on with us quite often and and we've been getting that view. So, it's great to it's great to hear you reference back to them because that's something we we get that point of view pretty often as you know

>> Matt and Hunter they see the front line they see the clients they've got a big sales force uh they got a lot of institutional information and so you know you always got to take what they say seriously >> absolutely so let's say your 5-year cycle um thesis plays out right and Republicans win the election based on the ISM moving and crypto's booming and everybody's really happy with the economy what happens after that Raul Well, we don't actually know whether they're going to win it or not. So, that's the thing the market's going to get scared of next >> and when and what I don't know. We've got prediction markets this time around.

So, it'll give us some better odds so we can understand this. But we don't know. And you've seen how close every election is. So, it's going to be nailbiting. Will the markets not like that? You know, I don't know how this plays out because it could be by September the market goes, "No, [ __ ] this. This is too risky because if the Democrats get a reasonable amount of votes, then it could slow everything down >> and that could hit the tech, the AI trade, it could hit the crypto trade, all of this. Or it gets through the election and then it suddenly rips again into year end because people think there's now clarity. Um, and then they'll have to start slowing the economy somewhat. Now, I don't think

they'll want to raise rates unless we get an inflation problem, but they'll certainly slow the liquidity down because they don't need to roll debt in year one of a cycle. It comes it comes later. They start in year 2, three, and four. So, or five in this case. So, we'll see. I don't know about 2027. I'd imagine it's a down year, but who knows with what's going on and how fast the world is moving. We don't really know. Um, but we'll use the liquidity framework and and assume that it will work. I want to zoom out a little bit and and get out of the the the weeds of this year. You've said multiple times that the crypto market cap is going to go from roughly three trillion today to 100 trillion maybe in 10 years. How does that happen? Raul, >> it's really simple. Firstly,

when you've got a network adoption model like Bitcoin, it's actually works like Google and Facebook and all of these. is they use metaf's law as an as a evaluation model and that allows you to predict network growth over time and you just use a log regression channel and you can map out the price of Bitcoin because that worked perfectly for Google. Facebook, they've been in those channels. The NASDAQ has been in that channel since 2000. It's extraordinary the power of these network adoption models. So they become pretty forecastable. Again, nothing is perfect, but if you put the uh Bitcoin market cap into a log regression channel and put it forwards, you get to hundred trillion by

2032 2034 you know, whatever. Let's call it 10 years. So, that is a so what must be true for that to happen? Simply, well, stable coins can add a huge amount of activity and therefore value to the network. Scott Besson's already said within three years they think they can get that to $3 trillion. So what multiplier effect does that have on the underlying because it's not $3 trillion of assets just stored. There's economic activity that drives the value of the blockchain. We've then got the asset management industry coming into this space. The banks coming into this space. We're then talking about tokenizing equities. We're talking about tokenizing fixed income. We're talking

about tokenizing futures markets. We're talk talking about tokenizing all of these real world asset big markets. I'm not talking about real estate and stuff like that. I'm talking about high velocity, massive use case markets. So if that's the case, well, those markets are all, you know, think of it this way. The DTCC who are going to blockchain over time clear about I don't know a few quadrillion like two, three, four quadrillion every year of assets. That's a lot of economic activity and if you put that kind of activity on chain it's a lot more than having meme coins and that drove a lot of value in itself to Salana. So you just got to

think of the magnitude of the finance industry but it's not just the finance industry because we need we're going to have to have digital ID in this AI world. So that's a lot of billions of people who need digital ID of which it's likely to go on chain. What else are we going to do? A lot of our data will go on chain. Marketplaces of data. How do we sell data? The whole ethos of web three, read, write, and own. That's not even happened yet, but we'll have that where things like the music industry starts reorganizing itself around blockchain.

Social media organizes itself around blockchains and sources of truth. In an AI world, a source of truth is very important. So you can suddenly see that it's actually the future of the internet as opposed to us punting meme coins and that gets you to hundred trillion easily. Stable coins are reshaping the financial order but most companies don't have the opportunity to participate in the rewards they generate. Plus launching a stablecoin means wrestling with complex regulations, building bespoke infrastructure and burning endless developer hours. Enter Bridge and its new product open issuance. Bridge lets companies send, store, accept, and even launch their own stable coins instantly. Seamless fiat to stable coin flows, control over reserves and rewards, and full interoperability across every bridge issued token. No

more patching payment rails, no more monthslong launches. Visit milkgrow.com/bridge to see how it works. Sure, tokenized financial products are the future, but there is a big sticking point. They all need to speak to each other. This is a tough problem to solve, but chain link does exactly that. It's the universal language for financial markets, linking Wall Street to web3, banks to blockchain, and so much more. See how Chainlink is linking the world by going to milkroad.com/chainlink. So, Raul, I have a question for you because you you have uh a crypto punk. You're a big believer in digital art as well. Um, and clearly you've been around the crypto circles circles for a while.

How do you reconcile the I guess more like grassroots independent anti-inancial system original ethos of crypto that I feel like you you're you're a believer in you're kind of part of that, right? Um how does that reconcile with this massive uh tokenization of the financial system that's now going to be on crypto? How do you kind of merge those narratives? So my very first thesis on Bitcoin was was that the you know the the gold element of Bitcoin itself had value. But then I said the blockchain I think I wrote this in 2013 or 2014 is like but blockchain itself becomes the mechanism by which all assets will move and be stored. And I

got there because after Lehman Brothers, nobody knew who owned what collateral because there was like 32 claims on each piece of collateral. When the when the European banking crisis came, we almost lost everything again because the sovereigns were going to go bust. And then you realize that nobody knows who owns the collateral. We had the Cypress Bank bailout and you realize you don't even own your own money because they took all the money in the bank accounts. Everything over €100,000 got taken. So, you realize nobody owns anything. And I realized that blockchain was the answer to all of this. So, what we're seeing now is what feels like the anti-rebellion. It's like Wall Street is is adopting our technology, but we're

actually winning because at the core of it still is the ethos that we can own it ourselves. We can store it ourselves. We can move it ourselves. And they've now seen what we've seen. And I always said we're going to frontr run the institutions and we've done that. So it might not feel cyberpunk anymore, but there's still plenty of things that can. Privacy, you know, if you want to have a fight against the institutions and the and the powers that be, that's the other one, right? Zcash, that's a big fight to come. So we've got that. Um, so we are changing the world and it wasn't going to be just a bunch

of us owning Bitcoin and trading with each other. It was going to be blockchain rails becoming the rails for everything on the internet of storing value, moving value, and a source of immutable truth. If you win truth and ownership, you've won the battle because we didn't have ownership and now we've got ownership. Sure, if if you want to put it into a ETF, great. And people say, well, they've taken our product and financialized it. Yes, but it's also meant that Bitcoin has now been accepted as not only a store of value, but collateral as well.

So therefore, we've actually through the back door, through the Trojan horse of them thinking they're absolving our thing, we've actually won the war. So, Raul, you've framed crypto as as the um I guess the savings vehicle for the exponential age. You've trademarked in our industry at least the don't [ __ ] this up tagline and telling us to to you know not miss this opportunity between now and third 2030. How would I [ __ ] this up? What mistake could I possibly make to [ __ ] this up? >> Okay, so most people have a limited period of time to unfuck their future.

And our future's a [ __ ] because most people, you know, really can't afford to get into the economic system in the way that their parents could. So, you can't accumulate wealth. You can't accumulate lifestyle. And you feel like you're endless hamster wheel having to juggle all of these different jobs and these opportunities. You're learning to vibe code in case you can build an app. And you know, it's a relentless pressure for people. And then they're speculating wildly to try and make this money back. And that is how [ __ ] they feel. That's the symptoms. But we've been gifted an asset class which is the greatest performing asset class in all recorded history. Now, yeah, didn't do that well last year, but over time it's doing, you know, between

50 and 150% returns, including down 85% bare markets. So, you've got a chance of making some real wealth here. So, you only have one job in a secular bull market. If you look at Jeff Bezos, if you look at Bill Gates, if you look at Elon Musk, what do they all do? Not trade their own stock. It's time. You just need to be in it. And it compounds over time. And it compounds over time unlike anything else. So let's say Bitcoin does 100% a year. NASDAQ's doing about 18% a year. So it's five times the returns of the NASDAQ in the greatest technology boom of all time.

So if your job is to stay in the trade for as long as possible, your one thing is not lose control of your tokens. So that's rule number one. That's how do you secure them? How do you cuss them? Then it's don't then don't allocate capital into too risky stuff. And a lot of people make this mistake. They think Bitcoin is not going to have enough returns. Maybe I don't like Salana and ETH I'm not sure about, but I can see people making 20x returns in whatever trade and they go out the risk curve because they want to make the money now. But if you say to yourself, give myself like five, eight years, seven years to make money. Can I

completely change my outcome for life? Yes. But you just have to own high quality assets over a period of time. If you want to do more speculative stuff, do it with a small amount of your portfolio, 10%, 20%, but no more. Now, if you're 23 years old, sure. But again, realize that you don't want to lose your chips at the casino because then you can't play the game. And the game is the ability to unfuck your future. Because after we get to about 2030, 2032, we've got a whole world where AI is more intelligent. It's the apex species on Earth. You'll be putting these super brains into super beings which are the android robots.

We'll have financial markets which are what I mean we're seeing people building a SAS product in 2 hours using clawed code and soon the agents will be building the products for themselves for their own private gains. We're already seeing people experimenting with that. So we don't even know what companies are going to be. We don't know what markets are going to be. How do we compete with AGI in global markets? We don't. So really, we need to try and make as much wealth as we can before this all happens, which I call the economic singularity because after that things get weird. Doesn't mean we can't make money after that, but the way of making money will change, I think. So that's why it's really important to self or custo your your tokens. Well,

don't do stupid [ __ ] by connecting your wallet to websites and let yourself get hacked. Don't FOMO into the next trade because somebody else is making money. Have a core asset allocation and let time do its work and it'll compound because of network effects. Um, it's, you know, generally those are the rules is just try not to and don't use leverage. That's the other classic way because even even I do it from time to time. And I'm like, if the chart looks really good, I could just just use one times leverage. So I'd be taken out on a 50% draw down. What's the chance that XYZ token is going to go down 50% in the middle of a bull market and then you get

an event like 1010 and then you've lost your stake at the casino. You're out of the game. And that's what leverage does. It's very hard to use leverage. Again, if you want to do it in your 10% or 20%, do it. Learn. But not for your core holdings because if anything goes wrong, if I'd have done that and suddenly I got stopped out, that would have been that would have been all of the work I put in since 2019 wiped out to a zero. That would have been horrific.

>> I'm glad you didn't do that before 1010. >> Yeah. So, I don't do it. I don't do it. a little voice in your head starts saying, "You know what? Really, I could juice my returns. Just don't do that. You don't need to." >> How does how does crypto fit in in this 2030 like post AGI world? >> Well, last time I checked, you can't divide a dollar lower than 1 cent. So, stable coins are not going to be useful for agents because they're going to be making microp payments for tasks because they're going to pay other agents for they'll have to in the end for compute and electricity costs. So, it pulls in an agent tells them there's going to be

a cost element and so there's going to be a inter agent money system and crypto rails are how it's going to work. what crypto, how, we don't know, but that seems to be where this is going. Crypto rails also matter for digital ID because we want to know who's the AGI and who's the human. So, there's a lot of things that, you know, and then because everything falls into these blockchain rails, you need crypto for all of it. And that allows for the faster transfer of assets. If AGI is going to trade equities, it'll want it in micros secondsonds on everything. And that's

just not possible. FX flows are, you know, two-day settlements. Equities are one day settlements. All of this stuff, it'll all go. But a lot of the trading will be done via agents and they will use blockchain to do it. Not only do you have agents using blockchain to build their own economies, but agents will be using blockchain to be able to transfer, store, and move assets around fast enough. >> So, will we need crypto then? I mean, if the agents are the one the ones using it all the time, should we still be holding are we going to be holding our crypto?

We trusting an agent to hold it. Maybe it's a little too far off from now. >> Well, no. Let's say you store your own crypto. If the agents explode and start using crypto, the value of the network goes up. So, we get to benefit from the AI economy as it explodes because it's going to be using these rails. And what's clever about this, unlike the internet, is we can own part of it, which is what the token is. So, we can own the token and therefore participate in the agent economy by the value of these networks rising. Okay. That's super interesting. People don't see it that way, but it's a kind of offset against all of this.

>> Mhm. >> So, I don't think blockchain goes away. Will will they bring their own blockchains? Will they make changes? Of course. But that's fine. You know, there's new equities come all the time. There's new sectors, trends, all those things. But it gives us the opportunity to participate in an economy where we're not actually doing the trading. We're not actually doing the company building. We're not doing all of those things, but the value of these networks go up. So, we just have to sit there and do nothing. And if you think about it, it's the same as the people who own Bitcoin for a long time. Over time the network value has gone up because more people start using it. The institutions start investing in it and they reap the benefits by holding it and doing nothing which is again this whole you know don't

[ __ ] this up thesis. Just keep hold of this stuff and it will it should acrue value over time. >> Relfuck my future right now and I'm starting from scratch. I'm all stables. I'm all cash and and I want to get in before any of this starts. What how am I building a portfolio? So the first thing you should do and assuming you don't know much about the market is I would just go and buy Bitcoin, ETH and Salana in equal weights.

That will give you good enough exposure to the market and you you can then watch it, see how it feels, see what performs, what outperforms, understand what it feels like when the market goes down 30%. You know, you all have to get used to this. see how your emotions rise when it goes up a lot and you start to think you're invincible and you want to start using leverage and all of those things. Then you can start peeling off a bit of that this 10% idea and then you can go a bit further out the risk curve. Find things that are moving faster, things are getting new adoption. You can try new ideas. You can even try a bit of leverage there. But you keep this core waiting and it's it's unlikely to go horribly wrong. But you know, if I look

at my wallet of shame, my DGEN wallet, that 10% I never even got to 10% because I'm not I don't really like trading a lot. Um I look at it and it is an entire wallet of shame. There's not one profitable position. These are the things when friends call me up say, "You got to do this. this is an amazing meme driven by a robot that's based, you know, oh yeah, this sounds incredible. You do it and it goes to zero, you know, it's all there and then you think, you know, I'm going to I'm going to try this sector, this theme because it seems to be hot. Goes to zero or not zero, but it goes down a lot. So that wallet of shame gives you a lot of instruction about how good you are at the game and what game you should be playing. But the easy

game, own the core assets, just hold them. if we were building something more on the AI side. Um, and I don't I don't mean portfolio, but I mean just in terms of sectors, right? Because you're talking about AGI, you're talking about uh onchain agents and everything. Which sectors of AI, if we really really zoom out, and you've had a lot of great guests that discuss this kind of stuff like Jordy Viser and other people, what sectors of AI do you think are really going to explode between now and 2030 paying attention to? >> What chains are suitable for AI? really it's probably of the big ones it's probably Slana and Sui because they're fast performance cheap so that's something so you you could do it that way or then you look at okay what is

necessary in AI and it's like compute models all of that stuff who's doing stuff there well obviously bit tensor sounds interesting does it have the adoption effects I don't own any yet but you know I keep my eye on it because it's interesting Then there's things like, you know, what happens to the X42 protocol that's on base and the A42 that's on SU and there'll be a bunch of these, you know, can we make money out of agents using payment rails and those tokens? Don't know, but that's kind of interesting as well. But sooner or later, there's going to be a lot of trading models, AI trading models that get tokenized, too.

and there'll be marketplaces for those and they'll get tokenized as well. So, there's going to be plenty of ways to participate. I would be careful of chasing narratives. We saw it with virtuals and all of that hype cycle because we don't know what's going to get adoption, but we do know that Bit Tent has some adoption and has some attention that's persistent because of Grayscale, Barry Silbert, and a whole bunch of others. and we know that some of these underlying chains are performant enough for AI. That's where I'd start the bet, but just be careful of going too far out of the bet thinking that you've cracked the big one cuz we're not sure yet.

>> Is there a particular area of society that that you think AI will disrupt? If we if we just stop the crypto talk for a second, is there any area you think will be the most disrupted out of everything? >> Look, this is the greatest discovery in the history of humanity and it'll be our last. People don't get their heads around this. People just don't understand that we have birthed apex intelligence that is above that of humans. And we're going to put it in humanlike bodies or any shaped body, a car, a truck, a plane, a boat, a humanoid, a dog like or whatever it is.

And it's going to come with an AGI brain. I mean, are you [ __ ] kidding me? So what role do humans have? We're seeing now humans spinning up people who've never programmed before spinning up everything from websites to entire platforms using clawed code. And that's happened in the last month and a half. And now you're seeing like app store sales or new products listed on the app store going vertical because we can create. But what it does is turn everything into a zero because in a digital world eventually you can make endless amounts of

anything. Well, blockchain actually solves that in a digital world because you you can have digital scarcity. So I think a lot of you know most jobs change first. We get the ability to lean in much like the unfuck your future. First thing you got to do is use these tools all day. Be at the front. Don't be the guy left behind. So you use the tools, but over time you'll realize that you're going to be replaced by the agents anyway. And then we society will reorganize. It's not like we're all sitting at home picking our noses with nothing to do and the government gives us money. That's what half the planet thinks, but we're humans. We do one thing that no AI can do and will never be able to do and that is be human. So

when I explain this to people, people like, "What do you mean like your face now?" I was like, "What are you talking about?" So, we have not built beaten a computer at chess for 35 years. Yet, we play chess. Not only that, but chess is the chess industry is the biggest it's ever been. The mega stars of chess get paid more money than, you know, other sports stars. That's weird. Oh, but look at football teams and sports teams. They're trading at record prices every year. Why? They can't be replicated by AI. You've got humans competing with humans in a in a thing that's unforcastable, not

easily forecastable. Can't be decided by AI. It has to be decided by the humans on the pitch. And it we all get together and celebrate the same thing together as humans or watch the same thing and argue and fight over it all day. That's to be human. We're seeing music tours, the largest ever. So big that Taylor Swift's tour was talked about by three central banks, Australia four Australia Singapore the UK, and the US. The Taylor Swift effect. And why is that? Well, because it's a human experience. We go to the concert, we're amongst humans. We're having an experience together. So, we will find many ways of finding value out

of human attention. and being humans. Web 3 points this way, you know, how do you tokenize these communities? How do you how do you create economic value? Um, and there is clearly a lot of economic value and there's going to be more that we will find. So, I think we just selforganize into communities and communities of like-minded interests that are human elements, some of them online, and we already see that with Minecraft or Roblox, right? These are digital communities with economic value transacting. It'll go to web 3 eventually because then it's true economic value. So we we can do it online, but the in-person thing is the premium. You know, that feeling of being

at a music festival or a sports game and having a 100,000 people go through the same emotions is human and the AI can't do it. So that's what I So I don't worry. Of course, we have a role. >> Are we going to be buying those Taylor Swift tickets with our our UBI role? No, because we'll earn. So my view on the music industry is that it's really complicated. 80% of the economics gets taken by middlemen, but everybody has rights over certain parts of it. So you can't break it down to the component parts unless you're a new band and say, "Hey, let's have a a token or do something in web 3 world."

But there's one element that that is mainly removed from that. That's album cover art. So, we go to the old thing of having an album or a CD and you take out the artwork and read it and look at it and it was special. Most of the artwork for albums were made by artists like Damen Hurst has done tons of album covers. Banksy have done has done them as well. So, you've got artists creating cultural records with the culture of music and they're highly collectible, but they're not anymore because it's Spotify. So, imagine if Taylor Swift had an album cover made by whichever artist, choose your favorite artist. I'm going to go with Xcopy.

So, Taylor Swift's album is an X-Copy piece of art. She sells 50,000 of these at whatever price, call it a,000 bucks. And that thousand bucks gets you one of 50,000 of this piece of art. XCOPY gets paid a royalty straight on the smart contract, but she now gets a social graph of all of her fans, her ultra fans, and those people can then start accumulating like Taylor Swift credits or tokens for their actions. Hey, I went to six of concerts in the tour. I bought merch. Now, my NFT has status.

So, let's say it accumulates tokens for activity taken. You're in the fan club, you're posting on social media, you get rewarded. Now, your Taylor Swift thing, you can redeem it for like, let's say, front row tickets or whatever it is. Or you're suddenly now 28 years old and you don't like Taylor Swift anymore, that NFT has enormous value in it and you can just sell it and maybe it's worth 50,000 bucks. So, your fandom has now paid you. That's where we're going in all of this, >> right? Well, we're almost at the end here. Um, we canvased our our pro community for some questions for you and we've been able to actually incorporate a lot of them into uh the interview today. So, you've already answered a lot of them, but I will get to a few that that stood out that we didn't get to

chat about. Um, so we're going to bring this all the way back to to uh the current conditions. We've gone all the way to Taylor Swift NFTts that last you a lifetime and now we're going to bring it all the way back to today, January 27th. Um, how important is the Clarity Act passing in say Q1 of this year to the crypto market recovering from current lows? And if it doesn't pass, will there be any impact to your thesis? We've kind of covered that. >> We have gone without regulation for so long and we've fought the battle that that is that is the kind of status quo. So if it comes, it's an accelerant. That's how I look at it.

>> What has been your most accurate and your most completely wrong prediction? And I'm gonna expand this to your your lifetime of investing in finance. >> I know I've had a lot of good predictions over time. I think Global Macro Investor has been the best performing research service of all time. So, and I've been writing for 20 years. So, you know, I had oil going to zero in 2020. That was quite a brave call that nobody had. I think no, I actually said oil was going negative and it went negative. And that I did that when oil was at like 40 bucks or something. I said in 2013 when I wrote the first macro strategy piece on Bitcoin and it was trading at $200, I said it's going to $100,000 on its way

to a million. And that proved out to be pretty correct. So I've had a lot of good calls, bad calls. I had tons of those, too. I [ __ ] up an entire year, which was 2009. I remained I got 2008 really right, 2007 really right. And then I stayed bearish. Even though all of my macro framework was positive or turning positive, I just ignored it because I was emotional. I was like, "No, this is going to be the Great Depression." So all of these indicators are going to hook down again.

It's going to get worse. So I ignored my entire framework and stayed bearish and gave up a huge amount of the gains that I've made. I mean, it was ugly. I mean, I've really truly [ __ ] up that year. So that was horrific. You always get trades wrong and that's normal. You know, there's hilarious ones where people try and pin me on, oh, you said ETH's going to 15,000 when it was at 5,000 or whatever. I'm like, it was at the end of the cycle and I bought calls using 5% of my portfolio having made a 13x in ETH. I'm like, it doesn't really matter. So, you can make those kind of calls. You can tell by my wallet of shame that almost all of those sorts of trading calls of hey this sounds like a

great idea all go to [ __ ] too. What you're trying to do is on balance I found that longer term I tend to be more accurate than short-term. I'm not really a very good short-term trader. Even I used to run a hedge fund. I left because of this because I decided that long-term was the natural advantage. Um so there's too many bad trades to talk about. Most of them, if you're in a long-term trade, you tend to probabilistically be right. 2009 was my horror story where I just didn't do what I should have done and I learned a big lesson from that.

>> Okay, the last one for you, Raul, and thank you for sharing all that. Actually, wait, hold on. Wait, what what made you realize you were wrong in 2009 when markets just ripped? Like, what made you finally realize that you were on the wrong? >> Markets ripped and my indicators kept going up and I'm like, surely they're going to hook down. Can't everybody see what's happening here? And after a while, I mean, it took me a long time. In 2010, I was, you know, I closed out in 2009. 2010, I was still kind of paralyzed because you just can't see the market properly when you make such a bad mistake like that. So, it took me, yeah, it took me two years really to get over it. Uh, and then the European sovereign crisis came in 2011 12 and that gave me something to get my teeth into. But it

it took me a long time to even learn to be long. Macro guys tend to make most of the money in bare markets and you the world has changed since 2008 because of money printing. Took a long time for me to think about buying equities and stuff. I'd make money in different ways in bonds and stuff took a long time. The mental scarring of stuff is is quite big or the or the the learning that you've made that you have to learn to ignore. It's difficult. >> What's your advice for getting over that kind of stuff and even speaking maybe to people who got wrecked on 1010 overleveraged or or you know still can't really find their feet in the market now? honesty with yourself. It's actually hard.

You'll find reasons why Binance screwed me, but really were you doing what you did you follow the don't [ __ ] this up thesis? You know, I'd apply that to my macro as well if I'm not using my macro framework of which I've built it and become well known for and I'm not using it. Well, then I [ __ ] it up. But you have to actually look yourself in the mirror. And I found writing about it helps. Writing what did I do wrong? what can I learn from this? How do I do it? Also, taking a bit of a break, not trying to go back in immediately, but just let your emotional state calm down and let yourself start to feel like you can see markets again. And that takes time, and you know, it depends how badly

you've screwed up. It takes time to get over that. There's some really good people who can get over it quickly, but it's not easy. >> Last one for you, Raul, and it's a light-hearted one. Does Raul's British accent make his job easier? And do people listen to him more seriously? >> Um, sadly, yes. For some reason, they think I'm intelligent. You know, I only got accepted to one university, which was the shittiest university, you know. But because I got a British accent, I was speaking to Americans and Canadians. They're like, "Oh, he must know what he's talking about." And he's got a gray beard, so he's really, you know, he's wise. No, I'm the same [ __ ] trying to figure it out as everybody else is. Man, I wish that worked for French Canadian accents, which I could I could turn on in an instant, but I think I think it's

the opposite for that one. Uh Raul, you've been wonderful, man. Thank you so much for coming on the Milk Road and uh hopefully we see you again sometime this year uh as as the year continues and and hopefully turns green. >> Yeah, let's hope I'm not coming on to say, "God, that was a [ __ ] year or really [ __ ] it up." Let's hope it'll be right this time. >> I doubt it. All right. Thank you, sir. >> Thank you, my friend. If y'all are making swaps or trades right now, highly recommend you check out Milkroad Swap. This is a DEX that we built in partnership with Cow Protocol. Why do we build it? Not to make money. Just honestly, so we could have a place to do our swaps for the lowest fees that we could find. This is the fees on

Ethereum, Arbitum, and Bass are only.15% fees. Uh this is a huge difference from uh other centralized exchanges that charge half a percent or even up to 1.2% fees on their swaps. Also, you can swap on Salana all at swap.mmillgro.com. Check it out today. You won't be upset. And you can join me in my favorite place to make swaps on chain. Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milkro Daily and Pro Newsletters and start investing like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky.