In a recent discussion, leading financial thinker Raoul Pal further examined the dynamics of how individual investors engage with cryptocurrency markets, focusing on the importance of nominal prices — essentially, the cost of a single token. He emphasized, “People are going to acquire tokens like XRP, Dogecoin, and Cardano because they are viewed as inexpensive relative to other options.”
Pal categorized the crypto landscape into three distinct risk levels: robust layer-1 platforms that he referred to as “low-risk,” a more complex “middle tier” comprising various DeFi projects, and a straightforward trading strategy he labeled “the Beginner Trade.” This term, he explained, isn’t meant to deride new investors, but simply to depict common purchasing behavior among newcomers.
Understanding the ‘Beginner Trade’: XRP, ADA, and DOGE
Pal broke down the psychological factors at play. New investors often look at the price of Bitcoin, which may be soaring past $100,000, and feel priced out: “I can’t even afford a fraction of that!” In stark contrast, they see mid-range cryptocurrencies with prices they can manage: “XRP is $3, Dogecoin is $0.25, and Cardano is around $0.80.”
This, he argued, leads to predictable outcomes in investment flows, where funds tend to gravitate towards coins with lower absolute prices, overlooking market cap or liquidity aspects. “I’m not implying that these choices are foolish, nor that those who invest in them are foolish,” he clarified, stressing that this pattern has consistently emerged during retail surges.
Pal suggests two distinct investment strategies based on his analysis. The first consists of “major layer one blockchains” that are gaining traction, citing Solana and Sui as examples of safe bets that tend to experience significant growth as developer activity increases.
The other strategy involves mid-tier investments, which he described as more challenging to navigate, often requiring insight into specific DeFi tokens. He illustrated his point regarding “the Beginner Trade” by showcasing how new investors often default to purchasing the cheapest options within the top market tier, emphasizing that this tendency remains a strong draw when retail interest returns.
Throughout the discussion, Pal contextualized his insights within a broader market cycle he has referenced over the past year. He pointed out to his audience that the start of a new favorable market phase was anticipated as early as August, citing data-driven research and performance indicators for select tokens.
He highlighted impressive returns for various assets: Sui leading with +650%, followed closely by XRP (+630%), Dogecoin (+210%), Bitcoin (+140%), Ether (+105%), and Solana (+51%). He reiterated his strong endorsement for Sui, calling it his “top choice” going forward. This perspective is shaped by what he defines as “The Universal Code.”
Combining the insights from the interview and subsequent commentary, it’s clear that Pal envisions retail investors continuing to flock towards lower-cost, widely recognized cryptocurrencies like XRP, Dogecoin, and Cardano, particularly as the costs of Bitcoin and Ether escalate.
Moreover, he remains optimistic about layer-1 technologies that are gaining adoption, suggesting they will benefit from increased on-chain activity and developer interest, with Solana and Sui exemplifying his preferred options. Conversely, he expresses hesitance towards mid-tier, thesis-based DeFi projects, labeling them as more complex compared to broader market alternatives.
At the time of reporting, XRP was trading at $3.27.
