Crypto in '26: Raoul's Vision or We Get Rekt? | Raoul Pal and Mando | REKT Vision (January 09, 2025)

Key Concepts

• Market Consolidation & Undervaluation: Bitcoin is currently in a “chop” phase after a rally, underperforming other assets, but is considered significantly undervalued based on macroeconomic factors and historical correlations.
• AI as a Dominant Force: The rapid advancement of AI, particularly AI agents, is reshaping industries and creating new opportunities, with the AI race being described as humanity’s most important endeavor.
• Macroeconomic Shifts & Geopolitics: A shift in US foreign policy towards a “multipolar world” and geopolitical events are surprisingly contributing to market stability, alongside expectations of easing monetary policy.
• Liquidity & Regulatory Clarity: The market awaits increased liquidity through potential US government action (shutdown resolution, Clarity Act) and is sensitive to changes in Federal Reserve policy.
• Long-Term Potential of Digital Art/NFTs: NFTs and digital art are viewed as a long-term investment with the potential to become highly valuable as the crypto market matures.
• Crypto’s Unique Characteristics: Crypto possesses inherent “reflexivity” and “convexity,” offering the potential for outsized gains compared to other asset classes.

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Market Overview & Performance (Parts 1 & 2)

The crypto market is currently experiencing a period of consolidation after a rally to $94-95k for Bitcoin. While not in a bearish state, Bitcoin is underperforming gold and stocks. Altcoins drove the recent rally, experiencing gains up to 40% in a short period, fueled by a bounce from previous declines. A previous concern of a drop to $80k for Bitcoin now seems less likely. The market is awaiting clarity on a potential US government shutdown and the passage of a “clarity act” which is expected to unlock liquidity through changes to the Supplementary Leverage Ratio (SLR). A key observation is that the market isn’t outright bearish, but is constrained by lingering supply, particularly from altcoins that experienced significant declines (up to 80% on “tick price wicks”). Bitcoin is estimated to be significantly undervalued, potentially trading between $140,000 - $160,000 based on its correlation with the NASDAQ and broader market trends, a discount created by temporary factors. Back-testing against six other variables confirms this undervaluation.

Macroeconomic & Geopolitical Landscape (Part 1)

Recent geopolitical events (Venezuela, Iran, Central America, Greenland) are having a positive impact on markets, contrary to historical trends. This is attributed to increased US hegemony and a perceived reduction in market uncertainty. The US is moving away from a “rules-based global order” (UN, WTO) and pursuing its own path, creating a “multipolar world,” which is seen as a stabilizing force. Resolution in Iran is expected to lead to cheaper and more abundant energy, boosting the US AI trade. Securing rare earths (Greenland) is also part of this strategy, mirroring China’s approach to securing resources for the “tech revolution.” The expectation of 150 basis points of Fed cuts is seen as potentially positive, but there’s concern crypto could be left behind if other asset classes benefit more.

The AI Revolution & its Implications (Part 1)

The AI race is described as the “single most important thing we’ve ever done,” potentially being humanity’s last technological invention. The emergence of AI agents (like Claude, Chat GPT) is a significant development, with Claude’s Opus model allowing for seamless integration with existing systems, automating tasks like data analysis and expense optimization. AI is enabling individuals with no coding skills to create applications rapidly, leading to an “infinite” supply of apps. The financialization of data is anticipated, with tokenization creating marketplaces for data and potentially allowing individuals to sell their personal data for financial gain. While AI is advancing rapidly, the value of human interaction remains crucial, particularly in areas like sports, customer service, and community building.

Investment Strategies & Future Outlook (Parts 1 & 2)

Gold is currently following financial conditions and leading liquidity, suggesting further potential gains. The metals trade is expected to continue as long as financial conditions ease. Intricately made human items (art, vintage cars) are expected to increase in value as AI automates more processes. NFTs and digital art are viewed as a long-term investment, akin to the classic car trade, with the potential to become “ultra valuable artifacts” as the crypto market grows to $100 trillion. One speaker has a substantial position in Ethereum (ETH) due to NFT holdings. A “buy and hold” strategy is advocated, avoiding active trading. Portfolios are primarily Bitcoin and Sui, with a significant ETH allocation due to NFT investments. Rocket Labs is highlighted as a successful tech stock investment. Crypto is believed to ultimately outperform due to its inherent characteristics of “reflexivity” and “convexity.”

Market Disruptions & Exchange Intervention (Parts 1 & 2)

The October dip in crypto was likely caused by market makers being unable to access APIs during a period of forced deleveraging, forcing exchanges (Binance, OKX) to intervene and absorb the selling pressure. This intervention is believed to have created a temporary supply overhang. A theory is proposed that cryptocurrency exchanges may have intervened to prevent a complete market collapse, stepping in to buy assets when market makers couldn’t access APIs. This is presented as a necessary action to maintain stability, not necessarily a nefarious one. The “alligator jaws” closing refers to the narrowing trading range and consolidation phase in crypto, suggesting a potential breakout is imminent.

Key Takeaways & Resources

The current market presents a unique opportunity, with Bitcoin significantly undervalued and poised for potential gains. The AI revolution is a dominant force reshaping industries, and the long-term potential of digital art and NFTs should not be overlooked. While macroeconomic factors and geopolitical events play a role, crypto’s inherent characteristics offer the potential for outsized returns. Resources like Realvision.com/join offer member-generated ideas and alpha research, and the Real Vision Crypto Gathering in Miami (February 22-25) provides networking opportunities.