Interview with Real Vision CEO: How to Succeed in the Encryption Field by 2026 Without Relying on Luck

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Source: “When Shift Happens”, Youtube

Compiled by: Felix, PANews

Real Vision CEO Raoul Pal shared his framework for achieving success in the cryptocurrency space by 2026 without relying on luck: hold the right assets and then do nothing. Below are the highlights from the interview compiled by PANews from the podcast “When Shift Happens.”

Kevin: I recently went to Silicon Valley and talked to a lot of people, which has strengthened my long-term perspective. Today we need to discuss this because I think it's important for people to understand, but either they don't understand or they don't want to understand. Much of people's anger is due to a mismatch in timeframes.

Raoul Pal: It's as if you can tell them the direction of future development. The proliferation of technology will not stop; the current market size has already exceeded 3 trillion dollars and will eventually reach 100 trillion dollars. So, we've only gone 3% of the way, and I estimate it might take 10 years. This is a long-term shift, but everyone will ask, “What about today?”.

Kevin: How would you respond to haters? I saw someone say that you often use “looking at the long term” as an excuse, saying it whenever things are not good in the short term. How would you respond to such people?

Raoul Pal: In the short term, it's mostly noise, but in the long term, it is driven by two key factors: network adoption and currency overissuance, making it more predictable. The short term will always deviate from the long term, which people are reluctant to accept. Everyone is pinning their hopes on the M2 chart, but I say it won't match perfectly, and people interpret that as it should always match perfectly. When there is a deviation, they say I'm wrong. My job as a macro analyst is to figure out why there is a deviation and what has changed. For example, this time liquidity was pulled out by the Treasury's general account, along with the government shutdown. People don't understand and think everything should match perfectly, but that's impossible. In the short term, noise always far outweighs the signal, and only by focusing on the long term can one see the signal clearly.

Kevin: I see many smart people, especially those who used to be traditional finance traders, now saying that the crypto market has matured, with more and more institutions getting involved, and an increasing number of professional traders using technologies like AI. Aside from long-term investments, there is almost no alpha left in the market, so what you can basically do is to buy and hold like an ordinary investor or trader, betting on the long-term trend you mentioned.

Raoul Pal: I've seen this situation before. In 2004, I left the hedge fund industry for this reason. In 2004, I was focused on macro strategies. Macro strategies are more volatile and are long-term strategies because they essentially involve trading around macroeconomic and economic forces. Now, there is only one ISM data point each quarter, or one GDP data point each 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, or it might be shortened to 3 months at turning points, but it usually takes 18 months to 3 years. That is the essence of macroeconomics.

Later I realized that as new investors flooded into the hedge fund investment space, they forced everyone to value assets monthly and then judged your performance based on the fluctuations of that month, rather than your performance over the year or the returns from that trade. No matter how the stocks you bought fluctuated, as long as the price dropped during the month and you were still in profit, you were supposed to close your position. I thought at the time that this way of doing things would not make any money. This practice stifled market volatility and reduced everyone's returns. Today, the crypto space faces the same problem. The situation in the macroeconomic field is even worse, as the rise of system funds, high-frequency trading, and so on, has caused macroeconomics to lose the advantages of short-term trading. I left macroeconomics and founded Global Macro Investor (GMI) to prove that long-term investment is the way to go.

Kevin: This is especially difficult for a generation with ADHD (Attention Deficit Hyperactivity Disorder).

Raoul Pal: Yes, it all feels like a video game.

Kevin: 2025 will be quite difficult for crypto investors unless you invest in a few of the right tokens; otherwise, the returns will be 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. The second game we overlay in the crypto space is how well the specific token asset you buy is being adopted. Whether it's L1, L2, application layer, DeFi, or anything else, the key lies in the speed of adoption and the degree of devaluation. This is the entirety of the game we are in. So people need to figure out the whole of this game. Then things get a bit complicated, how to obtain liquidity?

In traditional cryptocurrency terminology, liquidity refers to quantitative easing. It had been printing money, but now it has stopped. Then you have to figure out the net liquidity of the Federal Reserve, which is the Treasury's general account and reverse repurchase operations. This used to be the only source of liquidity in the system, but they have exhausted the reverse repurchase funds. The Treasury general account is like a checking account, and they keep replenishing, emptying, replenishing, and emptying it. So the balance of this account keeps fluctuating. In fact, it does not help with liquidity. The liquidity we see is actually the depletion of reverse repurchase funds. Therefore, the rate of change in liquidity has been very low. This is one of the factors.

The cycle has been extended. Some say there will be a four-year cycle, and that is indeed the case. But there is a reason for this. After 2008, interest rates were brought to zero, and countries planned their debt for a period of 3-5 years, extending it every four years. In 2021-2022, interest rates returned to zero, and they extended the duration of debt to 5 years. So, the place where money was supposed to be printed in the original fourth year has been pushed to the fifth year, which is 2026. With 10 trillion in debt needing liquidity, it is only in 2026 that significant liquidity will be required. However, there are too many tokens now, and liquidity cannot save all projects. In the past, anything bought would rise; now it doesn't work that way.

Kevin: Yes, many tokens, no matter how much liquidity they have, can still lead to losses because they are bad investments.

Raoul Pal: Yes, no one is using it. A few can become memes, but it's hard to maintain. What people don’t understand is that there’s also a risk curve among mainstream tokens: Bitcoin retraces 30%, Ethereum retraces 40%, Solana retraces 50%, and SUI retraces 60-65%, depending on their maturity, user base, and market depth. The core of the “DTFU” (Don’t Fuck This Up) framework that I use is not to make the most money, but to not lose too much and then compound over the long term. It sounds boring, but that’s the truth.

Kevin: “What does 'minimum regret investment portfolio' mean?”

Raoul Pal: You won't feel foolish looking back. L1 is the simplest, has a large enough scale, and is adopted; it won't drop to zero in one cycle. Although it may “bleed” slowly, it won't instantly go to zero. Then you need to check if you are blindly following the trend, now that ChatGPT is free, you can check on-chain metrics, user growth, and other situations.

Kevin: Is ChatGPT's analysis of on-chain metrics reliable?

Raoul Pal: Last week I wrote an article about Metastas, valuing it based on stablecoin transfer value / active users. ChatGPT itself suggested defining active users using five metrics such as DeFi, gaming, etc., and then ranking the chains based on these metrics to see which chains are overvalued and which are undervalued. It can give you a pretty good judgment, as it performs well in almost all aspects. It is also good at interpreting technical charts. You can give it a chart, ask for its opinion, and it will provide you with a decent result.

Kevin: Do you follow your own “DTFU” investment framework?

Raoul Pal: Basically compliant, but my positions are more concentrated. When everyone hears that I am concentrated, they feel they should also concentrate. I am concentrated because I built a valuation model. It is likely to change at some point. Its volatility is greater, and it is designed to be more volatile because it is an early network adoption model. Therefore, its downward volatility is greater than its upward volatility.

In the past two weeks, I sold tokens wildly, and suddenly this morning I woke up to see SUI up 20-30%, and others up 8%. I can accept it, but others may not understand. In addition, I have other businesses that can generate cash flow, which allows me to allocate assets correctly, and I take on greater risks because I did more homework. But that doesn't mean my judgment is necessarily correct. Others should not listen to my asset allocation advice; they should follow the overall trading principles. Never borrow someone else's beliefs. This is the most important thing.

Kevin: Is it possible for you to underperform compared to those who listen to your “DTFU” advice?

Raoul Pal: Of course. I am only responsible for my own capital. If I'm wrong, I bear it myself. As long as my direction is roughly correct, that's fine.

Kevin: I saw a tweet: My girlfriend has been dollar-cost averaging into ETH and BTC since 2019, not looking at Twitter or following trends, and has significantly outperformed her boyfriend. The clients that often perform the best in brokerage accounts are usually the “deceased” ones.

Raoul Pal: Yes. So we always return to the starting point. Right now, most people are in pain because they are stagnating or losing money during this cycle since they did not buy in large amounts at the low point, which is difficult to do. The simplest way to get rich is to dollar-cost average into BTC forever, which has better returns than dollar-cost averaging into the S&P 500. But this is not the real way to make money in the crypto space. I think a better approach is to wait until the market drops by X% before doing dollar-cost averaging, for example, a drop of 30% or more, and then invest at a frequency that is three times that of when the market hits new highs. This way, the compounding returns will definitely be better. It is not difficult to do.

Kevin: It's psychologically difficult. I buy Bitcoin every month, always feeling that it's more likely to rise, but I end up buying at local tops.

Raoul Pal: I bought SUI three weeks ago, and then it dropped a lot. But over time, you forget the entry price, unless it's a significant low.

Kevin: Do you have a collection of tweets insulting you?

Raoul Pal: No, but I read the tweets that insult 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 between 2017-2021 are now turning to AI, saying that crypto has not fulfilled its promise of decentralization, only ETFs and stablecoins, which is very disappointing. But I think they actually haven't made quick money in recent years and have lost their advantage. In Silicon Valley, it's completely the opposite; they say the big returns are still to come. Aishal from Electric Capital compares crypto to a more liquid form of venture capital. Most venture capital investments will go to zero, a few will be very profitable, but you have to hold them forever, because exponential things ultimately scale beyond imagination.

Raoul Pal: Venture capital is for entry before token generation, with lower valuations. Buying on the open market, the power law is not as strong, and price is very important. In my last round, I tried a broad portfolio, but most of the returns still came from ETH, BTC, and a bit of Solana, with basically nothing else. The current market size is about $3.5 trillion, conservatively estimated to reach $100 trillion in 10 years, and we are only at 3% now. Bitcoin's dominance will decline, while smart contracts' dominance will increase due to more use cases. The entire market still has 30 times more upside potential in the future.

Kevin: Silicon Valley understands exponential growth, while Wall Street understands linearity and mean reversion. So every time there’s a bull or bear market, they feel like the market is done for. In fact, if you look at it from a longer perspective, it’s just a smoothed trend. Amazon, Google, Tesla are all the same. Early on, there are large fluctuations, but they become smaller as they mature. What does your investment portfolio look like now?

Raoul Pal: Other than buying a bit of SUI three weeks ago, I haven't done anything else. I bought some NFTs. People will screenshot and say I'm promoting SUI, and then someone will call me a scammer. My allocation is my own business. I beg you not to mimic my risk appetite. I just want to say to base your decisions on your own risk tolerance.

Kevin: What are your real thoughts on SUI by the end of 2025?

Raoul Pal: Its performance on the risk curve is normal. It has underperformed Solana in the short term but is still in an upward trend. There are no technical issues with the project; the key is whether it can achieve adoption. The user growth rate is faster than the last round of Solana, with a high value per active user. The model shows it is undervalued by about 80% compared to Solana. A general market rise is still needed to validate this.

Kevin: How to allocate your income each month nowadays?

Raoul Pal: Cash flow will be used for investments, living expenses, and various costs. Like everything else. Besides cryptocurrencies, I also invest in other things, such as a large amount of digital art. As your funds grow, you'll want to update some things. So you'll change speakers, change cars, etc. You do this to maintain the quality of your assets because if you don't, the quality of your assets will decline over time, like cars will break down, age, and become a hassle, requiring constant maintenance.

I like to spend money on vacations and travel. This is the quality of life. Quality of life itself is an investment that can bring you experiences. So, I have invested a lot in this area.

Kevin: You mentioned digital art, which is NFT. How is NFT doing now?

Raoul Pal: The Basel Art Fair is underway, and half of the digital art market is there. Although many of the artworks they create are not actually digital. The situation now is that once the price of ETH or Solana reaches the upper limit of the range, sales will explode again as people start to recover 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 prices peak, artworks become the focus, and prices start to hit new highs.

We are beginning to see some big-name investors entering the space. Nikki Mala of Ribbit Capital acquired Punks IP and Crypto Punks IP; there are other investors, like Alan Howard, who is a major investor in this area. The overall value of artwork is rising, but it will still fluctuate with the price of cryptocurrencies. So prices may dip slightly, but in the long run, they tend to outperform the market, and more will emerge in this field.

Kevin: Yuge Yatsu, co-founder of Animoka, recently said that NFTs are the asset class of this generation. I think most people would think, “What the hell? Is he fooling himself? Is he denying reality?” What I want to ask is, does he understand something that most people still do not?

Raoul Pal: Yes. Everyone thinks things like Monkey JPEG have depreciated. It's a foolish speculative behavior. People don't realize that the speculation in cryptocurrency is extremely strong, accelerating the validation of certain ideas through highly speculative means. And speculation has proven that the value of digital assets lies not just in being tokens on exchanges. So, we have Crypto Punks, which have a total value of 10 billion dollars. Game assets, tickets, financial contracts, digital identities… the TAM is huge. The most expensive block space is art. Everything in the digital world can go to zero, only digital scarcity maintains value. Wealth will ultimately flow to art.

Kevin: You posted in early November saying “buy the dip”. Is this still your advice now that it's December 2025?

Raoul Pal: Yes. I think the market has bottomed out. So we experienced the liquidation in October. The U.S. government extracted liquidity through the general account of the Treasury, and then they shut down the government, and now the liquidity is gone because they can't even tap into the Treasury's general account. Cryptocurrency, being the most liquidity-sensitive asset, saw its liquidity plummet, exposing all the weaknesses of leverage and triggering a series of issues such as systemic liquidation of leverage.

If all my research on liquidity is correct, a wave of liquidity influx is about to occur. The system currently tells us that the banking system is experiencing tight funding, which leads to frequent fluctuations in the money market. There is a shortage of funds in the market. The Federal Reserve is aware of this as well. They have stopped quantitative tightening. However, they have another task, which is to complete the financing work by the end of the year. Banks do not have enough liquidity to roll over debts and make balance sheet adjustments. Therefore, the Federal Reserve 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 based on risk tolerance and goals. My framework is a 5-year cycle; everything else is noise.

Kevin: What is it that you hold on to but know you should let go of?

Raoul Pal: Feels he can help more people. But has to let go, because some people don't want help. It's very frustrating. You are also trying hard to help everyone, but many people are desperately trying not to be helped.

Kevin: What does the voice in your head say when you wake up every 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 the trivial things. As long as the big direction is right. Don't mind that SUI dropped 30% this week, focus on the fact that the entire market will reach 1 trillion dollars.

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