In the worst-case scenario, Bitcoin's year-end price could reach $250,000.

Compiled & Edited by: Deep Tide TechFlow

Guests: Raoul Pal, CEO of Real Vision; James Connor, Managing Partner at BloorStreetCapital

Podcast Source: Raoul Pal The Journey Man

Original Title: Raoul Pal’s 2025 Market Predictions ft. @BloorStreetCapital

Broadcast Date: February 4, 2025

Background Information

In this episode of the podcast, Raoul Pal from Real Vision engages in an in-depth conversation with James Connor from Bloor Street Capital, discussing the **key trends shaping cryptocurrency, stocks, *AI*, and the global economy in 2025. Will Bitcoin break the $500,000 mark? Is AI replacing human jobs faster than we expect? What will happen next with interest rates, inflation, and the dollar?

(Deep Tide TechFlow Note: Real Vision is a company focused on financial and investment education, providing high-quality financial content and analysis. Its goal is to help investors better understand market dynamics and investment opportunities.

Bloor Street Capital is a company focused on connecting companies with suitable investors. It helps companies connect with investors through webinars, one-on-one meetings, and lunch presentations.)

Topics Covered

• Bitcoin and cryptocurrency price predictions

• The future of AI and automation technology

• Stock market outlook and S&P 500 trends

• Inflation, interest rates, and the Fed's next decisions

• Trump's economic plan and global trade

• Why this is an "investor's golden bull market"

Bitcoin Market Outlook and Price Volatility Analysis

James Connor:

When it comes to market performance, I know you are very optimistic about Bitcoin's long-term prospects, but I learned from a recent interview that you believe Bitcoin will perform well this year, albeit with significant volatility. Could you elaborate on your views?

Raoul Pal:

Bitcoin's performance is driven not only by global liquidity but also closely related to the adoption of new technologies. This year, we can be certain it is a "liquidity easing" year, especially as countries need to roll over a large amount of debt, which is usually very favorable for the cryptocurrency market.

However, in recent months, due to policy adjustments by the Federal Reserve and the Treasury, as well as the strength of the dollar, global liquidity has tightened to some extent. This change has had a short-term negative impact on cryptocurrency performance. However, this situation will not last long, either in terms of time or price; once liquidity is re-injected into the market, Bitcoin's performance will improve accordingly.

Looking back at 2021, we can see that the pandemic caused a temporary halt in the global economy, but it quickly rebounded, with the business cycle peaking as early as April 2021. Typically, in years of presidential election cycles, the business cycle peaks at the end of the year. Bitcoin's performance in 2021 was very complex, but the current market environment is more akin to the situation after Trump's election in 2017. At that time, due to continuous liquidity injections, the market experienced a sharp pullback of 25% to 30% at the beginning of the year before quickly rebounding and maintaining strong performance throughout the year. The main driver of that liquidity injection was not from the U.S. but led by China. I believe that this year, China may again play an important role in global liquidity injection.

Therefore, I expect Bitcoin's performance this year to be stronger than many anticipate. Although many investors are still haunted by the market volatility of 2021, when Bitcoin experienced rapid rises, crashes, and further fluctuations, I believe this year's market trend is more likely to resemble the patterns of 2013 and 2017. So yes, I remain optimistic about all risk assets, including Bitcoin, this year.

Future Predictions for Bitcoin Prices

**James Connor: If Bitcoin reaches $100,000, do you think it will *correct* 25% to $75,000 before continuing to rise?**

Raoul Pal:

I don't think Bitcoin will experience a significant 25% drop. The market is more mature now, and with the introduction of Bitcoin ETFs, market volatility has decreased. If Bitcoin's price corrects from $100,000 to $90,000, I think that is a reasonable adjustment range, and the price may stabilize around that level.

In the worst-case scenario, I believe Bitcoin's year-end price could reach $250,000; in the baseline scenario, it could rise to $350,000. If the market experiences explosive growth similar to 2017, Bitcoin's price could even break $500,000. Of course, this prediction carries a lot of uncertainty, so I typically analyze different possibilities through a probability tree, listing the probabilities for various price ranges.

Overview of the Global Economic Situation

James Connor: How do you view the current global economy? Do you have any concerns when observing different regions of the world (whether Asia, Europe, or North America)?

Raoul Pal: I use the ISM survey from the Institute for Supply Management as the best guide for economic cycles, and overall, it is performing flat. While we see strong performance in the stock market, the economy remains sluggish. Typically, in a growing economy, the ISM index should be above 50. Although GDP is performing relatively well, the manufacturing sector still shows signs of weakness. Therefore, the economic cycle remains relatively slow, leading to a divergence between tech stocks and the traditional economy. The performance of tech stocks is not based on debt dynamics or real-world spending but relies on a very independent cash flow. The global traditional economy still appears weak, Europe has not recovered, the UK situation is relatively chaotic, and Canada is also slowing down.

China's Economic Dilemma and Debt Deflation

Raoul Pal:

China is currently facing a severe debt deflation problem, with bond yields plummeting. Due to the weak yuan, the Chinese government finds it difficult to implement effective economic stimulus policies while also unwilling to lose control over its currency. Meanwhile, there is a global hope that the U.S. will weaken the dollar, as the current strong dollar is putting pressure on many countries' economies. Typically, a strong dollar slows down the development of the global economic cycle.

He also mentioned that Trump is likely to adopt similar policies upon taking office, attempting to weaken the dollar's strength. This is because the U.S. needs to balance its economy through exports, and a strong dollar reduces the international competitiveness of U.S. goods, exacerbating the trade deficit issue.

Currently, the global economy seems to be in a "no man's land," with overall development appearing sluggish. However, based on the liquidity injections and changes in financial conditions over the past six months, many leading economic indicators suggest that a significant recovery in the global economy is expected this year.

The Profound Impact of Demographic Changes on the Economy

Raoul Pal:

As mentioned earlier, the dollar needs to depreciate moderately, and China also needs to create policy space to implement economic stimulus measures; otherwise, it will be difficult to effectively boost the economy. Currently, China's debt deflation problem is similar to the challenges faced by many countries globally: **excessive debt levels and an aging *population structure* make it difficult for GDP growth to cover debt repayment needs.**

This situation has led to a series of serious problems. China's real estate market is experiencing a crisis similar to the 2008 U.S. subprime mortgage crisis and the 2012 European debt crisis. Additionally, China's banking system is facing similar structural issues. Meanwhile, the rapid changes in the demographic structure further exacerbate the situation, with aging and declining birth rates leading to a sharp decrease in population, putting greater pressure on economic growth and debt repayment capacity.

The State of the U.S. Economy & The Impact of Interest Rates on Economic Growth

James Connor: I observe that the state of the U.S. economy seems somewhat similar to Canada, presenting a polarized situation. On one hand, some people are doing quite well; on the other hand, many are facing difficulties. Although the government claims that the economy or GDP growth is maintaining between 2.5% and 3% and that inflation is under control, the S&P and NASDAQ indices nearing historical highs still give the impression that the economy is not as strong as it appears. Do you have any other concerns about the U.S. economy? How do you view the economic outlook for this year?

Raoul Pal:

I do have some concerns about the U.S. economy, especially as the current polarization is very evident. Indeed, some people live in an economically prosperous "world," but more ordinary people are facing real pressures. Particularly those running small local businesses, their cash flow situation remains grim. This stands in stark contrast to the booming development of large tech companies.

Moreover, while official data shows that inflation rates have decreased, the cost of living remains high. For example, the doubling of prices when dining out provides a direct sense of inflation's impact. This high-price environment places significant economic pressure on ordinary families. Therefore, I believe that policies such as lowering interest rates are necessary to alleviate the debt burden on ordinary people and stimulate economic activity. Ultimately, we need to rely on economic growth to address these fundamental issues.

For me, growth means: we need to lower interest rates, we need to let the dollar depreciate, we need to stimulate the U.S. economy, and we need to relax economic regulations.

The implementation of these policies will inject more momentum into the future economy, even though GDP growth may not see significant improvement. Currently, the trend GDP growth rate is about 2% or slightly below that level, but recent trends show some signs of increase. So, will the U.S. economy accelerate further? Is it possible to see a few periods of high growth at 3.5%? It is not impossible, especially when a new government takes office, as they typically implement tax cuts and other stimulus measures. Given Trump's strong focus on the economy, I am optimistic about the future economic outlook.

As for Europe, the challenges they face are entirely different. Europe is currently adopting a strategy opposite to that of the United States, continuously increasing regulation and taxes, which undoubtedly adds to the burden of living. However, Europe has a different social security system compared to the U.S., and its economic structure also varies.

In addition, the performance of the Chinese economy is also crucial. China is not only an important market for U.S. exports but also a major buyer of global goods. If the Chinese economy falters, its import demand will inevitably decline, which will have a ripple effect on the global economy. Therefore, we need a revitalization of the global economy.

On one hand, the U.S. needs to implement the economic policies proposed by Trump; on the other hand, China also needs to find ways to address its own issues to promote global economic recovery and growth.

Predictions for Future Inflation Trends

James Connor: Some believe that the biggest risk in 2025 is that inflation will accelerate again. I guess their concern is that tax cuts, increased tariffs, deregulation, and the expulsion of immigrants may exacerbate inflationary pressures. What are your thoughts on this issue?

Raoul Pal:

I do not believe that inflation will become a major issue in the future. Indeed, as the business cycle recovers, there may be some degree of inflation, such as the impact of rising oil prices. But overall, the impact of inflation is relatively limited. The main issue we face now is currency depreciation, a trend that is pushing up asset prices and continues to persist.

At the same time, I believe we are about to witness a technological wave that has a strong deflationary effect. We may not yet fully understand the profound impact this technology will have on the economy. Therefore, while the business cycle may bring short-term inflation, I expect that during this cycle, the inflation rate will first drop below 2%, then may briefly rise to around 4%, but ultimately will fall back down.

The Deflationary Effect of AI and Robotics & How Automation Affects the Job Market

Raoul Pal:

I believe we are experiencing the most deflationary period in human history, closely related to the development of robotics and artificial intelligence. We are creating an infinite labor resource at nearly zero cost. Take Amazon as an example; the number of robots currently used by the company has surpassed that of human employees. As one of the largest employers in the U.S. (possibly second only to the postal service), Amazon's robots can work year-round without complaints and do not require breaks.

Robots do not have emotional issues, do not complain, and do not incur additional costs such as human resource management. From an economic perspective, this means that businesses are incentivized to rely more on technology rather than human labor. This has become an undeniable fact. For instance, in Tesla's factories, almost all operations are performed by robots; the situation is similar in other modern factories. Therefore, even if manufacturing returns—an issue heavily advocated by the Trump administration—companies will not hire a large number of human employees. After all, this is no longer the 1950s. In today's world, as long as technology is cheaper and more efficient than human labor, businesses will not hesitate to choose technology over manpower.

Financial Environment and Debt Cycle

James Connor: What is your view on the 10-year Treasury bond? Recently, the performance of the 10-year Treasury bond has been very strong, with yields rising from 3.60% in September to currently between 4.64% and 4.70%. And all of this is happening against the backdrop of the Federal Reserve's three consecutive rate cuts. What does this indicate? Are you concerned about the rise in 10-year yields?

Raoul Pal:

I am indeed concerned because this indicates that the financial environment is becoming tighter. Moreover, the rise in 10-year Treasury yields has decoupled from inflation expectations, indicating that the issue is not with inflation itself.

In fact, every four years, the governments of major countries around the world need to refinance their debts, and we are currently in such a cycle. I call it the "everything code cycle." Looking back to 2008, the world experienced a "debt amnesty" as interest rates were lowered to near-zero levels. This low-interest-rate environment allowed governments to pay almost no interest for a period, effectively providing a breather for their debts. In other words, the policies at that time were like telling governments: "Don't worry about interest; just focus on managing your debt." As a result, countries restructured their debts into three to five-year terms.

This also means that approximately every four years, we enter a critical point of debt refinancing. Since 2008, this four-year cycle has become a regular pattern, profoundly impacting the global economy.

However, this time is somewhat special. Due to the pandemic and inflation, the timing for rate cuts has been severely delayed. Typically, at this stage of the economic cycle, interest rates should be lowered to levels close to the GDP growth trend, such as 2%. But the current reality is that they cannot do that. The result is that debt is continuously accumulating through new debt, as governments are forced to issue new debt to repay old debt. This "debt-for-debt" model is brewing a debt crisis, which is precisely why they urgently need to lower interest rates.

This situation has led to massive debt issuance, and at some point, the problem will explode, forcing governments to take action. In fact, this is not just an issue for certain countries but a global problem. For example, interest rates in the UK have risen to the highest levels in 30-40 years. In highly indebted economies like the UK, such high-interest rates cannot be sustained in the long term, so governments must take measures to address this.

One possible solution is to implement "yield curve control." This means that the government will not completely exempt debt interest payments but will control debt costs by setting a cap on government bond rates. Additionally, they may have to restart quantitative easing (QE) policies to inject more liquidity into the market. The current liquidity tightness has led to a decline in market demand for bonds, which is why a large amount of debt cannot be absorbed by the market.

Another issue is that the strength of the dollar has significantly increased the cost for countries like Japan, China, and Europe to purchase U.S. Treasury bonds. Therefore, the overvaluation of the dollar not only exacerbates the debt problem but also forces them to take measures to depreciate the dollar while lowering interest rates. I believe this will help alleviate the pressure on 10-year Treasury yields. Trump has publicly stated that current interest rates are too high, and I believe Scott Besson's top priority is to address this complex challenge.

The Connection Between Interest Rate Policy and Trump's Economic Agenda

James Connor: So how do you think interest rates will change? Will the 10-year Treasury yield reach 5%? If it does, what impact will that have on the stock market?

Raoul Pal:

If we discuss the phenomenon of market differentiation, I believe that rising interest rates will have little impact on companies like Google, Apple, Meta, and OpenAI. These companies have a compound annual growth rate of up to 30%, and even if rates rise to 5%, it won't be a problem for them. More importantly, these tech giants hold a large amount of cash, and rising interest rates can actually allow them to earn more, which is often overlooked. Therefore, I am not worried about these companies being affected.

Of course, if inflation rises, it may be necessary to reassess the discounted cash flow value of these companies, but a simple rise in interest rates will not be an issue. The real impact is on the ordinary economy, which creates market differentiation. I expect the 10-year Treasury yield may rise to 5% or even 5.5%. Therefore, I believe Trump may take measures to exert pressure to alleviate this situation as soon as possible.

Another complex factor to consider is that Trump wants to renegotiate trade agreements with various countries, including Canada, China, and Europe. The strong dollar is a primary tool he uses to pressure other countries. Because these countries also hold a large amount of dollar debt, a strong dollar increases their repayment costs. Trump may leverage this to apply pressure while offering some concessions, such as if these countries agree to adjust tariffs or reduce trade deficits, the U.S. will provide certain benefits by lowering the dollar exchange rate. This strategy can both strengthen the U.S.'s negotiating position and help alleviate domestic economic pressure.

The Trend of the Dollar and Its Impact on Trade Agreements

James Connor:

I really cannot understand why the dollar is so strong, especially compared to the Canadian dollar. The Canadian dollar is currently at its lowest point in 22 years, having dropped 10% just in 2024. So how exactly can the U.S. depreciate the dollar?

Raoul Pal:

In fact, if the U.S. clearly signals its desire for a weaker dollar, it usually has some effect. Another method is to inject liquidity into countries like China and Japan, which hold a large amount of dollar debt, by providing "swap lines." This is equivalent to directly providing dollar support to these countries, which they can use to repurchase U.S. Treasury bonds. The mechanism works by the U.S. providing dollar loans to the global financial system through the Federal Reserve to alleviate these countries' dollar shortages. Ultimately, these countries will reinvest the dollars back into the U.S. Treasury market, creating a win-win situation.

You might ask, if such a mechanism exists, why doesn't the U.S. promote it? Why is the dollar still so strong? The answer is that the U.S. currently wants to maintain a strong dollar. The primary purpose of a strong dollar is to gain an upper hand in trade negotiations, especially when renegotiating trade terms with other countries.

Trump's Economic Policies & Inflation Risks

James Connor:

I originally thought that after Trump took office, he would do everything possible to keep economic growth between 2.5% and 3%, pushing the S&P 500 and NASDAQ indices close to historical highs while stimulating the development of the real estate market. But at the same time, he also plans to implement tax cuts, increase tariffs, and deregulate, which theoretically could bring inflationary pressures. Assuming these policies are indeed inflationary, this could lead to higher interest rates and a stronger dollar. However, Trump also wants the dollar to depreciate to attract manufacturing back to the U.S. and further promote economic growth. These goals seem contradictory. What do you think?

Raoul Pal:

One of the core aspects of Trump's policies is the energy relationship with Canada, which is closely related to oil. Trump is well aware that Scott Besson's strategy is working. Although current oil prices are not high, low oil prices are crucial for the economy's operation. They want Canada to increase oil production as much as possible, including advancing key energy projects like the Keystone pipeline. These energy policies can promote U.S. economic growth while alleviating some of the pressures brought by a strong dollar.

First, there are many variables in the economy. Some factors may trigger inflation, some issues may take a long time to resolve, while others can be addressed through simple means. For example, increasing liquidity through the Federal Reserve or the Treasury to stimulate asset markets is a more direct and controllable solution.

The government may promote economic growth by relaxing regulations, but at the same time, it also needs to avoid excessive inflation. To achieve this, they may attempt to regulate commodity prices.

As the economic cycle recovers, the return of inflation seems inevitable. The key question is whether this inflation appears in a non-cyclical, structural form (like the long-term high inflation of the 1970s often mentioned) or merely belongs to normal business cycle fluctuations, meaning inflation will rise in the short term and then gradually decline?

It is worth noting that the last round of tariffs did not trigger significant inflation, indicating that tariffs do not necessarily lead to widespread price increases, as exchange rate fluctuations can offset the impact of tariffs to some extent. Therefore, the situation is not as clear-cut as it seems.

Looking back at similar policies implemented when Trump took office, the dollar experienced a significant drop in the second week of January, while bond yields rose for the same reasons. These phenomena exhibit certain inflationary characteristics, but subsequently, bond yields gradually declined over the next 18 months. This suggests that the market often misjudges due to premature expectations of policy.

A key point you mentioned is when large-scale tariff policies will truly take effect. Typically, the implementation of such policies takes a long time, possibly 18 months to two years. Therefore, the increase in tariffs is usually gradual rather than a one-time event. While many believe these policies will take effect immediately, the reality is often different.

Market Liquidity and Stock Market Trends

James Connor: 2023 and 2024 are two outstanding years, with the S&P 500 rising by 25% to 30% in both years, and your investments performed remarkably well in 2024, yielding as much as 150%. Do you think the S&P 500 could see a third remarkable year?

Raoul Pal:

I think the answer can be found in the performance of the Nasdaq. The Nasdaq's movements are 97.5% correlated with liquidity, indicating that the core driving force of the market comes from the policy actions of the Federal Reserve and the Treasury, such as the Treasury's general account, reverse repos, and balance sheet adjustments. Additionally, the policy measures of various governments are equally crucial. Therefore, global liquidity is a key factor driving the market.

If we know that there is $8 trillion to $10 trillion in debt that needs to be rolled over this year, and the bond market is currently showing signs of stress, the government must inject liquidity to alleviate the situation. From a probabilistic standpoint, we are likely to see a significant amount of liquidity entering the market. Furthermore, Trump has always supported high asset prices, which means there is a high likelihood that the stock market will continue to perform strongly this year. Of course, the market may experience volatility, possibly even more severe than last year, but as long as the government continues to roll over debt, this trend will not change. Countries like Europe, China, and Japan are also facing similar debt pressures and need to inject liquidity to cope.

For the government, the top priority is to roll over debt, which is key to maintaining market stability. If the bond market collapses, the entire financial system will fall into crisis. To this end, the government needs to inject more liquidity, which will further push up asset prices and also enhance the government's image to some extent.

NVIDIA and Market Valuation

James Connor: What are your thoughts on valuation issues? For example, NVIDIA is one of the representative companies in the current market. As far as I know, it has risen by 170% in 2024. Are you concerned that NVIDIA or other companies are overvalued?

Raoul Pal:

Overall, price-to-earnings ratios have been rising. The main reason behind this is the impact of currency depreciation. While prices continue to rise, the growth rate of corporate earnings is often limited by GDP performance. For instance, if the rate of currency depreciation is 8% per year, while the annual GDP growth rate is only 2%, then the growth rate of corporate earnings may only be 2% or even lower, assuming nominal GDP growth is 5%. This means that the rate of currency depreciation exceeds the rate of earnings growth, leading to a sustained increase in price-to-earnings ratios. Therefore, relying solely on price-to-earnings ratios to assess the market may not be entirely accurate.

Additionally, **people may have overly high expectations regarding the impact of technologies like *AI* on corporate revenues.** Looking back ten years, Amazon's price-to-earnings ratio was as high as 600, yet it proved to be an excellent investment case. Therefore, the key lies in the growth rate of the company rather than a single valuation metric.

Overall, I believe this year will be a good year. Market valuations may rise significantly. However, after the debt rollover is completed, liquidity typically tightens, as inflationary pressures may resurface. This tightening of liquidity often triggers a market correction.

In this scenario, the market may experience a certain degree of adjustment before re-entering a growth cycle. I expect the valuation levels in this cycle to reach a higher range, although there may not be a significant correction, but the market may consolidate for a while or experience a decline of about 15%.

In the next cycle, cutting-edge technologies such as AI, robotics, autonomous vehicles, and Mars missions will gradually reveal their potential. These technologies will become the core driving force behind a new round of market prosperity and lead us into a complete bubble cycle. At that time, we can further contemplate how the market will evolve after the bubble bursts. I believe this "golden bull market" will last at least until the end of this century.

Analysis of Gold Market Trends

James Connor: What do you think about the performance of gold?

Raoul Pal:

The performance of gold is also influenced by currency depreciation. However, unlike other assets, gold does not have a technology adoption curve, so its price increase is usually not as pronounced as that of risk assets. Nevertheless, in the current liquidity cycle, countries need to depreciate their currencies to repay debts, which is a favorable factor for gold.

Therefore, I remain optimistic about the market prospects for gold. I believe that in the upcoming market cycle, gold will continue to perform well. Especially when the dollar begins to weaken, this will further drive up the price of gold. Overall, I think we are currently in a very favorable gold market, which is also a positive market environment for most risk assets.

Investment and Financial Opportunities Outlook for the Next Five Years

James Connor:

You have mentioned in many online interviews that we have a five-year golden period to seize opportunities to make money. I remember you brought up this point when discussing topics like artificial intelligence and robotics. What exactly do you mean by that?

Raoul Pal:

As a macro investor and analyst, my job is to look to the future and try to predict the direction of the world. Since 2000, I have been using an analytical framework that primarily focuses on *debt, deflation*, and **demographics. This framework has helped me maintain the right direction during the financial crisis and the European debt crisis, allowing me to better understand the operational logic of the global economy.

However, I did miss the wave of technological rise early on. Upon reevaluation, I found that our economic model has been driven by "scarcity" for a long time. As the economy shifts from manufacturing to services, the importance of expertise has gradually become prominent. This is why salaries in professional fields such as law, accounting, financial advising, and medicine remain high, as the supply of these services is limited while demand is very strong.

The Disruptive Transformation of Traditional Industries by AI

Raoul Pal:

However, artificial intelligence is fundamentally changing all of this. The development of AI is significantly lowering the marginal value of knowledge. Although many people have yet to realize it, knowledge itself is becoming increasingly cheap. For example, as a content creator, establishing a media company in the past might have required substantial resources, but that is no longer necessary. Similarly, the cost of film production could drop from $100 million to $5 million or even $2 million, which is a typical example of how AI is reducing production costs.

In manufacturing, the introduction of robotics is replacing human labor. The most expensive part of manufacturing is labor. So, will there be a complete replacement of human labor in the future? The answer is that while AI will indeed lead to job losses, the supply-demand relationship in the labor market will be balanced due to the aging global population.

What I am more concerned about is what it means for your business or my business when AI starts to replace us. If artificial superintelligence (ASI) emerges in the future, what impact will that have on financial markets? As investors, will we be replaced when AI becomes more efficient and precise than us? Will financial markets continue to be driven by human emotions, or will they be taken over by the logic and algorithms of machines?

Moreover, we are currently living in a revolution where software is devouring the world. With the proliferation of SaaS software, this trend is already very close to reality. For example, if you develop a perfect platform to provide financial advice, I can replicate your platform in just a few minutes and adjust it to comply with Indian market regulations. The convenience and efficiency of this technology are fundamentally changing the industry landscape.

The Profound Impact of AI Technological Advancements on the Economy

Raoul Pal:

What patterns do we have in business? What models do we have for earning rewards around knowledge? These models can be expanded in various places. Therefore, humans will always find new ways to make a living. I believe that online communities may be one of them, as humans are inherently social beings who need to interact and communicate with others.

However, the world is undergoing fundamental changes in ways we can hardly imagine. In fact, we have never been the top beings in the intelligence pyramid. If you observe the development of artificial intelligence, last year AI's IQ increased from 90 to 157, nearly doubling. If it doubles again next year, its IQ will reach 300, surpassing any human intelligence record. In the following years, it may continue to double, reaching 600, 1200, or even higher.

We do not fully understand how these changes will reshape the world, and as we enter this era of dramatic transformation, society may experience turmoil. But at the same time, this will also bring enormous opportunities—only these opportunities may appear in forms we have yet to understand.

Wealth Accumulation Strategies Before 2030

Raoul Pal:

In my view, if the global economy continues to rely on debt rollover, currency depreciation, and driving up asset prices, then we should seize this window to accumulate as much wealth as possible. As we enter the early 2030s, the world will change in ways we can hardly comprehend, and even traditional economic research methods may no longer apply. By then, we will need enough wealth and security to cope with an unknown business environment, as we cannot even predict what future business models will look like.

This high degree of uncertainty may be a tremendous pressure for many, but we are in the midst of the largest macro risk investment opportunity in history. Especially in the fields of technology and cryptocurrency, these areas are at a critical stage of the technology adoption curve, closely related to the trend of artificial intelligence replacing humans. It can be said that we are essentially investing in our own decline, but this also creates enormous wealth opportunities for us. Although there will be cyclical fluctuations and risks, this will better prepare us for the changes to come.

How Should College Students Plan Their Future Career Development? How to Respond to Industry Changes When Choosing a Career?

James Connor: What advice would you give to college students?

Raoul Pal:

First of all, when choosing a career, it's best to enter industries that are riding the wave rather than going against it. I chose to enter the banking industry back in the day, focusing on serving hedge funds. That was in the 1990s, at the peak of the financial bubble and the golden era for hedge fund development. I seized two important long-term trends that shaped my career. In contrast, if you choose the finance or consulting industry now, you will face headwinds, as many positions in these fields may be replaced by technologies like artificial intelligence. Therefore, I recommend selecting industries with long-term growth potential, such as artificial intelligence, robotics, and cryptocurrency.

Additionally, I also suggest that young people, in the face of future uncertainties, travel more and explore different cultures and people. Because in a machine-dominated world, the most important skill is "humanity." This experience will help you better understand the importance of interpersonal relationships, and interpersonal skills will become extremely critical in the future. I believe that those who can showcase human qualities are more likely to find their place in a rapidly changing environment, as future business models will undergo significant transformations.

If you want to enter the business field and have ambitious goals, then choose industries that have an annual growth rate of up to 100%. These industries are full of opportunities and are worth investing in, while those with stagnant growth are not recommended. Of course, if you want to open a restaurant, that is also a good choice, as dining is part of the human experience. Similarly, fields like tourism and travel also embody the core value of human experience.

In summary, either choose industries closely related to human experience or immerse yourself in the technology sector. Try to avoid the middle ground that lacks both growth potential and human value, as their prospects are no longer clear.

Potential Risks to Global Financial Stability

James Connor: Overall, you hold a very optimistic view of the U.S. economy, the U.S. market, and Bitcoin. But if we were to discuss a potential risk that many overlook, what do you think it would be? After all, when the market experiences a significant pullback of 25% or more, it is often due to some unexpected factors. If such a risk exists, what do you think it might be?

Raoul Pal:

I believe that the potential disintegration of the European political system could be a significant risk that is being overlooked. We are observing that the political systems in many countries are gradually rejecting traditional political figures, and this trend is also beginning to manifest in countries like Canada. Will this force the EU itself to undergo structural changes? And what impact will such changes have on global trade? This is a very important question, but few people delve into it deeply. In contrast, some frequently mentioned risks belong to the category of "known risks," which are not my primary concern.

In fact, when facing these crises, the response strategies of governments and central banks are almost always to solve problems through massive money printing. Whether it’s a collapse of the Chinese economy, a Chinese invasion of Taiwan, another global pandemic, or chaos in Europe, the solution seems to always involve injecting liquidity into the market to reduce the likelihood of extreme negative events (i.e., "left tail risk"). Looking back, the most shocking event was the global shutdown due to the pandemic within two to three months. How did the market react? Although there was a significant drop in the short term, it quickly rebounded due to the massive funds injected by the government. This pattern has proven effective during the 2008 financial crisis and the 2012 European debt crisis.

Therefore, we now live in a completely new financial environment. In this environment, investors are forced to hold risk assets because the government has effectively eliminated long-term downside risks through liquidity injections. Of course, this does not mean that the market will not experience volatility. For example, in years of insufficient liquidity, the Nasdaq may drop by 30%, and long-term assets may even drop more. But such pullbacks typically do not last long, as the government will take action again to inject liquidity and drive the market recovery.

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