Raoul Pal: Retail Capital Didn’t Leave Crypto — It Went Where Returns Were Higher

TL;DR

• Raoul Pal argues retail rotated from crypto to AI chasing performance, not out of disinterest.
• Adults under 35 have limited liquidity and follow whichever narrative has stronger momentum.
• Between 2023 and 2024, AI equities consistently outperformed most crypto assets.

Raoul Pal, founder of Real Vision, pushes back on the idea that retail investors walked away from crypto. His read is more precise: they rotated capital into artificial intelligence equities when digital assets lost momentum. For Pal, retail’s absence from crypto doesn’t reflect permanent disinterest — it reflects a rational decision made in an environment where AI delivered stronger relative returns.

The argument rests on a concrete observation about the profile of younger investors. According to Pal, adults under 35 face rising living costs, constrained access to housing, and limited disposable capital for speculation. In that environment, their money chases whichever narrative carries the strongest momentum at any given moment. Between 2023 and 2024, AI-linked equities outperformed most crypto assets across multiple stretches, Bitcoin included. Flows followed.

Raoul Pal: Retail didn't abandon crypto.

They lost their stake and went to a different casino (AI).

They're in their 20s, can't afford a house, working 3 jobs, and looking for a way out.

They'll be back the moment crypto outperforms.

It's rationality, not disloyalty. https://t.co/Jb2K6AumEc pic.twitter.com/0Ox1cU7g0w

— Milk Road (@MilkRoad) February 19, 2026

What a Retail Return Would Actually Signal

Pal argues retail investors don’t operate on loyalty to any asset class — they operate on performance. In 2021, retail participation in crypto surged when sector returns crushed traditional equities by a wide margin. Once that advantage faded, participation cooled. The same pattern repeated with AI.

Bitcoin currently consolidates near $64,000, while institutional infrastructure across the sector expanded with the arrival of spot ETFs and a broader derivatives market. For Pal, those elements set up conditions for speculative capital to return — but only if crypto reclaims performance leadership over competing high-risk narratives.

The takeaway is structural rather than anecdotal: retail capital is cyclical and reactive. If crypto reasserts itself as the highest-returning bet in the global map of volatile assets, participation can come back fast. The variable determining whether that happens isn’t sentiment or narrative — it’s relative performance against the competition.