Raoul Pal, a former executive at Goldman Sachs, has expressed his belief that two specific subsectors within the digital asset market could see astronomical valuations during what he refers to as “crypto summer”. Pal, who has a following of one million on the social media platform X, suggests that altcoin projects related to artificial intelligence (AI) and tokenized real-world assets (RWA) could experience exponential growth during this phase of the current market cycle. He explains that a “crypto summer” typically involves increased prices and higher trading volume.

However, Pal cautions that the period of “Crypto Summer” and its subsequent fall may be confusing, as everything will be driven by narratives and caught up in euphoria. This is when unproven narratives, such as AI and RWA, could reach unreasonable valuations. Pal also predicts that Ethereum (ETH) could outperform Bitcoin (BTC) during this time, and that Solana (SOL) could outperform both Bitcoin and Ethereum.

Pal states, “Crypto summer is usually the start of alts season which goes full ‘bubble-tastic’ in fall. This is when ETH bases and begins to outperform BTC. This is when SOL accelerates its outperformance of BTC and ETH.”

Despite his positive outlook on the crypto markets, Pal warns that digital assets will not experience a linear path towards new all-time highs. He expects to see a couple of significant corrections due to excessive leverage, referring to it as the “banana zone”. Pal has previously mentioned this term to describe a period in which Bitcoin and altcoins witness parabolic rallies on their way to reaching greater heights.

It is important to note that the opinions expressed in this article are not investment advice, and investors should conduct their own research before making any high-risk investments in cryptocurrencies or digital assets. The Daily Hodl, where this article was originally published, does not recommend the buying or selling of any cryptocurrencies or digital assets, and is not an investment advisor.