Raoul Pal: Why Ethereum Is Wildly Undervalued Right Now

Why Raoul Pal Is Eyeing EthereumETH-1.31%

Have you ever wondered if the crypto market is mispricing some of its biggest assets? Macro investor and Real Vision CEO Raoul Pal certainly thinks so. In a recent podcast appearance, Pal shared his latest views on the market. While he continues to hold Bitcoin (BTCBTC-0.88%), SolanaSOL-1.40%, SuiSUI-1.58%, and Zcash (ZEC), he pointed to Ethereum (ETH) as being wildly undervalued.

Pal believes that investors often miss the bigger picture when valuing major blockchain networks. While Bitcoin has clearly established itself as a premier collateral asset, Pal argues that Ethereum possesses unique upside potential—often called 'convexity'—that the market has not fully recognized yet.

The Ethereum Stress Test: A $1.5 Trillion Backbone

To prove just how important Ethereum is to the digital economy, Pal runs a mental stress test. Imagine a scenario where Ethereum suddenly goes offline tomorrow. What would actually happen to the rest of the crypto market?

According to Pal's estimates, an outage of that scale would immediately knock out between 70% and 76% of all stablecoins in existence. It would also freeze a matching share of the Decentralized Finance (DeFi) sector.

The fallout would not stop there. Layer-2 scaling networks built on top of Ethereum, the digital art and NFT markets, and tokenized Real-World Assets (RWAs) would all take a massive hit. Taken all together, Pal estimates that losing Ethereum would erase $1 trillion to $1.5 trillion in value almost instantly.

Because Ethereum acts as the essential plumbing for so much financial activity, Pal argues that its current market price fails to reflect its true systemic value.

Pal's Trading Rule: The Two Standard Deviations Strategy

Instead of chasing short-term price swings, Raoul Pal relies on a strict, mathematical strategy that he has used for two full years. He looks for moments when a crypto asset falls two standard deviations below its long-term trend line.

When an asset drops that far below its historic average, Pal buys in and simply holds. He points back to 2022 as a prime example, when he bought Ethereum and Solana near their market bottoms and held them as they surged toward all-time highs.

Pal warns traders against trying to sell at the absolute peak to buy back lower. In his experience, timing the market perfectly like that is 'psychologically impossible' for most people.

(Note: Past performance of digital assets is not an indicator of future returns. You can track live market data and price trends directly at bitkub.com/th/market/ETH.)

Looking at Solana, Sui, and Zcash

While Ethereum takes center stage in his analysis, Pal maintains a diversified portfolio across several other key crypto projects.

He remains bullish on Solana (SOL) and highlights Sui (SUI) for its strong 'economic density.' Pal notes that this underlying economic activity helped Sui navigate recent market pullbacks better than many other altcoins.

Additionally, Pal uses the same dip-buying framework for Zcash (ZEC). As global regulations tighten and user privacy becomes a bigger topic, he foresees growing long-term demand for privacy-focused digital assets.

Macro Trends: When Will Liquidity Return to Crypto?

Many investors wonder why crypto and tech assets have lagged behind global money supply (M2) growth recently. Pal explains that fresh capital spent the last year flowing heavily into physical AI infrastructure, such as data centers and specialized microchips.

However, that trend could shift soon. Potential interest rate cuts from central banks and renewed corporate spending could redirect capital back into liquid markets like crypto. Relative to traditional assets like gold and the Nasdaq index, crypto still appears historically cheap.

Looking at Bitcoin, Pal notes that it continues to trade below its long-term trend line and looks undervalued compared to tech stocks. Still, he cautions that sluggish overall liquidity could delay a major upward move in the short term.

The Long-Term Picture: Projections for the Next Decade

Speaking at the Sui Base Camp conference in Singapore, Pal outlined a bold vision for the digital asset space over the coming years.

He suggested that if macroeconomic liquidity expands and institutional adoption continues, the total crypto market cap could grow to $10 trillion within the next 18 to 24 months. Looking even further ahead to 2035, he believes the market could theoretically reach $100 trillion.

Pal also expects the total stablecoin supply to reach $1 trillion over the next three to four years as banks and institutions tokenize real-world assets on public blockchains.

He expects an 'economic singularity' driven by autonomous AI agents around 2030, making the next four years a crucial period for investors looking to position themselves in technology.

(Scenario Risk Warning: Market cap predictions depend heavily on complex macro assumptions, including global interest rate cuts, regulatory approvals, and technological adoption. If interest rates remain high, regulatory headwinds increase, or technological execution falters, market growth could stall or suffer significant declines instead of reaching these targets.)

Key Takeaways for Crypto Readers

• Ethereum's Network Effect: ETH powers over 70% of stablecoins and DeFi, making its core utility central to Pal's valuation model.
• Disciplined Strategy: Pal buys assets when they fall two standard deviations below their historical trend lines, focusing on long-term holding rather than market timing.
• Portfolio Mix: Alongside BTC and ETH, Pal holds SOL, SUI, and ZEC to capture opportunities in speed, economic activity, and digital privacy.
• Macro Drivers: Global interest rate cuts and shifts in capital from AI hardware back to software could supply the liquidity needed for the next market cycle.