Author: Raoul Pal, Co-founder and CEO of Real Vision

Original Title: “Where Crypto Fits in the Exponential Age”

Translated by: Hu Tao, ChainCatcher

Now scrolling through your information feed, you will find the atmosphere bleak. The cycle has ended, cryptocurrencies are dead, the four-year cycle pattern has shattered, and all those who advised you to buy are wrong. The price trends are vastly different from people's expectations, and when prices become incomprehensible, people tend to become pessimistic. This situation is not uncommon.

I have watched this movie countless times, and the ending is already determined. I have been navigating the cryptocurrency space for thirteen years and have made almost every possible mistake. So, before I tell you why I remain optimistic about cryptocurrencies, let me talk about how I messed it up because the real lessons lie within those mistakes.

I got involved in Bitcoin in 2013 when the price was $200 each. But the purchase itself was not the focus. Before I bought any Bitcoin, I sat down and wrote a report, which later became the first macro valuation report on Bitcoin in history.

Looking back with today's standards, the approach was rough. I applied the reserves of gold above and below ground (as if assessing the value of a commodity) to Bitcoin. If Bitcoin ultimately becomes the equivalent of gold, according to mathematical calculations, each Bitcoin will be valued at one million dollars, while the price of gold will roughly remain at today’s levels.

The article quickly spread in Silicon Valley and the finance sector because no one had previously built a macro framework for Bitcoin. It simply did not exist. And not only did I write this article, but I also recommended it to all my GMI subscribers, including hedge funds and family offices. In 2013, recommending Bitcoin at a price of $200 to those audiences was no easy feat.

That was my paper at the time, and I must admit I paid to get it published:

It was worth $200 today, and I thought it might be worth a million dollars, even conservatively discounting 90% due to my own foolishness or the uncertainty of the market, let’s say it’s worth $100,000 in ten years.

It turned out my estimate was roughly correct. We reached the destination.

But predicting the correct destination and predicting the correct journey are two entirely different things.

Here's the thing. I bought at a great price, it doubled, then tripled, and then plummeted by 84%. Okay, I told myself this is a long-term investment, I will do nothing. Then by the end of 2017, it started soaring again, and one day I looked at the screen and found it had risen to a number I could hardly believe. So, I sold.

Why? Because of panic, uncertainty, and doubt (FUD). The fork turmoil, the voice saying “this is just a bubble”, and that little voice telling me I was a hero for successfully avoiding a 10x drop and should celebrate, but then I let everything go.

I sold. And then it soared another tenfold, and I didn’t buy.

I tried hard to act like I didn’t feel like a complete idiot, but I actually felt very foolish.

It got worse because when the stock market crashed again, I bought back in during the COVID pandemic, thinking I was a genius for panic buying. Not at all. I sold at two thousand dollars, and then bought back at eight or nine thousand dollars. Buying, selling high, and those seemingly clever little trades around positions… all of this obstructed me from the only effective strategy.

I once calculated. If I did nothing, that initial $200,000 should now be worth about $100 million. That is the power of compounding, and it proves I truly am a complete fool. The asset did its job, while I was messing it up the whole time.

This is the lesson I paid an eight-figure fee to learn:

Zoom out, filter out the noise, and hold. The dead are the best clients for any brokerage because they do nothing.

That’s my confession. Now I understand some things I didn’t fully grasp back then.

Bitcoin is the vault

The articles I wrote in the past few weeks about currency devaluation relate to this. Demographic changes have led to rising debt, debt leads to currency devaluation, and your cash will devalue about 8% each year relative to long-term assets. If you want to understand the complete transmission mechanism, you can refer back to my previous discussions on currency devaluation. In short, holding cash is like holding a block of ice that is melting, and the rational approach is to own something that cannot be printed.

Bitcoin is the purest of these. Twenty-one million units, everlasting, with no committee able to vote to issue more. It is the rarest currency ever created by humanity. It serves as a store of value, a vault.

But the vault's capacity is limited, and understanding this cap is crucial. The potential market for Bitcoin is a global savings pool seeking safe havens. You can think of it as gold valued at around $35 trillion, plus a portion of other assets people hold for value preservation. The goal of Bitcoin is to capture an increasingly large share of this market pool over time, and I believe it has indeed done so. Its only real competitor is Zcash, a private cryptocurrency based on the same idea, which might ultimately capture 10% of the share. The remaining share belongs to Bitcoin.

So, the vault is real, it works well, and owning it is undoubtedly a fantastic asset. But the problem is, the vault is only half the story and just a smaller part of it.

The economy develops on this basis.

Bitcoin is not programmable. It was designed to focus on doing one thing well—nothing else. Smart contract platforms are entirely different. There are many of this type, but the ones I support are Ethereum, Solana, and Sui. The biggest mistake people make is lumping them together with Bitcoin as “cryptocurrencies” and then asking which coin will win.

What people overlook is that they are not even competing for the same position. Bitcoin addresses storage issues, while smart contract platforms address coordination problems.

My article outlining the “Exponential Age” framework explains how artificial intelligence, robotics, energy, and cryptocurrencies are simultaneously entering steep phases of their respective growth curves, and the economy is about to stop relying on human operations and instead rely on machines. Billions of AI agents will continue to trade, buy computing resources, and settle among themselves at a speed beyond human reach.

Now ask an obvious question: what do they trade through? Certainly not the banking system. You cannot rely on agent banks and clearinghouses with three-day settlements and weekend closures to operate a machine economy. Agents need programmable, instant, and always-online payment tracks. That’s the role of smart contract platforms. They serve as the settlement layer for the machine economy brought about by the exponential age.

So this is not a bet on a cryptocurrency but a bet on the infrastructure upon which the next generation of the economy will operate. These tokens are not currencies; they are shares in this network— the coordination layer of the digital age.

This means you cannot assess them in the same way as Bitcoin, let alone assess them like a company. They are not a business; they are an economy, and the value of an economy depends on the volume of activity within it.

Now compare these two potential markets together, because this is the essence of the entire argument.

Bitcoin is eyeing global savings. This prize is valued at about $35 trillion, comparable to gold, and worth holding.

Smart contract platforms act like tracks and will ultimately support trading in global real estate (about $400 trillion), global debt (about $325 trillion), and global equities (about $125 trillion). This is not just a larger benefit but a leap in magnitude.

So the conclusion is evident. The total value of all successful smart contract platforms combined should ultimately be multiple times that of Bitcoin. This is not because Bitcoin has failed—it hasn’t failed; it has perfectly fulfilled its mission. Rather, it’s because the economic system built atop the vault is far larger than the vault itself. The vault holds your savings, while the tracks underlie the entire economic system.

But they are merely utility tokens.

I can understand this opposition, as it is the most common bearish argument, which deserves serious consideration rather than easy dismissal. The argument is this: Bitcoin is designed to preserve value, and that is its sole purpose, so it accumulates value like money. Ethereum, Solana, and Sui are merely utility tools, the financial infrastructure, and infrastructure does not accumulate value like pure monetary assets. The technology is nice, but its investment value is low.

But the logic works in reverse too. Pure value storage mechanisms are limited by the scale of the savings pool seeking investment. That number is large, but the cap is fixed. The value of infrastructure assets is limited by the total amount of things that can be built on them, and each time someone launches a new feature, this cap is continually raised. Low fees do not equate to low value. They are the costs of using existing infrastructure, and the value of that infrastructure lies precisely in its cost being low enough for mass usage.

There is a crucial distinction here. Applications, lending protocols, and exchanges built on Ethereum are businesses. They have revenue, competitive advantages, and you can reasonably value them using cash flow. But Ethereum itself is not like that. The value of Ethereum comes from the sum of all businesses built on it. Shut down Ethereum, and you lose not just one company, but all second-layer networks, most of the stablecoin market, and the entire decentralized finance (DeFi) space, everything will disappear simultaneously. That is where the value lies. It is the foundation upon which all businesses survive, not just any one business itself.

The same logic explains why second-layer networks do not accumulate value like first-layer networks. Second-layer networks rent security from the base layer and return most of their surplus to it. Building a thriving second-layer network on Ethereum actually increases Ethereum's value. In the end, value will revert to the base layer.

So why is everyone bearish?

Back to our initial sentiment. If the long-term outlook is so bright, why does it feel so grim now?

The market has been well-suited previously: liquidity has increased, and the financial environment has been loose... but unexpectedly, the returns did not materialize as expected. The crash on October 10 and the chaos from the government shutdown degraded market structures, causing a delay. People often interpret the delay as the market's demise.

No part of the process encountered issues. The gap between the current trading prices of cryptocurrencies and the expected liquidity levels (which we call the “gap”) has lasted longer than I anticipated, but the gap will close, not vanish.

We have just emerged from historical lows in the ISM index below 50, when business cycles were nearly stagnant. The cryptocurrency market is driven by trading activity and investment, which means it relies on the support of business cycles. For a long time, it has failed to recover from that support. Moreover, Bitcoin's trading price has been below its overall liquidity levels, as it cyclically does. Bitcoin itself is more volatile than liquidity fluctuations, so its price tends to overshoot when liquidity is overheated; conversely, it will drop when liquidity is too cold. But in the long run, its correlation with liquidity is about 87%.

The market is currently sluggish, and people think the investment thesis for cryptocurrencies has failed. But that’s not the case. The business cycle has shifted. The ISM index has been in expansion for six consecutive months, with data as of July at 53.3, and historical experience shows that cryptocurrencies thrive in such environments. When the economic cycle rises, people turn to higher-risk investments, and the same goes for the cryptocurrency space. Junk bonds outperform government bonds, small-cap stocks outperform large-cap stocks, and Ethereum and smart contract platforms outperform Bitcoin because the increase in economic activity boosts demand for block space, while an increase in savings lifts the demand for Bitcoin.

What am I actually doing with all this?

I won’t provide you with a portfolio, nor will I tell you when the market hits bottom. Thirteen years of experience tell me I cannot predict market timing, nor can you—pretending you can will only lead you to sell at two thousand dollars.

What I want to tell you is what my previous confession actually means. This is a long-term game filled with emotions because the livelihoods of all of us are intertwined with it. The ultimate winners will not be those with the highest trading skills but those who truly understand the assets they hold, firmly believe that the proliferation of networks is an inevitable trend, and can endure the 50% drops that occur every few years like clockwork.

Zoom out. Filter out the distractions. Own the vault, own the tracks, and let the curve accomplish what I spent ten years trying to defeat.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。