Digital Asset Investor sparked lively debate this week after sharing a clip of macro investor Raoul Pal describing what he calls the “moron trade” — a common retail investor behavior — and using XRP as a prime example. The remark, while tongue-in-cheek, sheds light on a well-known market phenomenon where psychology often outweighs fundamentals. Pal explains that many newcomers to crypto gravitate toward the cheapest and most recognizable tokens in the top ten. His scenario is familiar: a first-time investor sees Bitcoin at over $118,000 and Ethereum at over $4,000, and decides those are “too expensive.” Instead, they opt for coins like XRP or Dogecoin because they are affordable per unit and have strong name recognition. Pal also distinguished between large, established Layer 1 networks like Solana and Sui — which are gaining real adoption — and smaller, mid-tier DeFi projects that are harder to assess. He emphasized that while some big Layer 1s can deliver strong returns with relatively lower risk, the “moron trade” tends to be purely price-driven. Importantly, Pal clarified that he wasn’t calling the assets themselves “moronic,” but rather describing a predictable retail buying pattern. According to @RaoulGMI XRP is the "Moron Trade". Translation: He didn't get his discount VC allotment. pic.twitter.com/lBmOUQlQA0 — Digital Asset Investor (@digitalassetbuy) August 9, 2025 The Psychology Behind the “Moron Trade” Pal’s point centers on two psychological drivers: price anchoring and the affordance effect. New investors often believe that cheaper coins have more upside potential simply because they can buy more units for the same amount of money. When such coins already have brand recognition — like XRP , Dogecoin, or Cardano — retail demand can push prices sharply higher during bull markets, regardless of whether network usage or adoption metrics justify it. However, this type of rally can be short-lived if it’s not supported by fundamentals. Without sustained adoption, transaction growth, or developer activity, these assets can suffer steep corrections once hype fades. We are on twitter, follow us to connect with us :- @TimesTabloid1 — TimesTabloid (@TimesTabloid1) July 15, 2023 Community Reaction Digital Asset Investor’s post quickly went viral, with reactions ranging from amusement to criticism. Some XRP community members took offense at the label, arguing that the token’s use case in cross-border payments gives it far more legitimacy than Pal implied. Others saw the comment as validation that retail enthusiasm for low-priced tokens will continue to drive gains in the next bull run. A few critics even suggested Pal’s remarks might stem from not having access to early venture capital allocations in XRP, a jab that circulated widely among XRP advocates. The Real Takeaway for Investors Whether viewed as an insult or an insight, Pal’s comments highlight an important truth: in crypto markets, narrative and psychology often drive short-term price action. Traders looking to exploit these moves must do so with strict risk management, while long-term investors should focus on measurable adoption and strong fundamentals. By amplifying the clip, Digital Asset Investor reminded the market of a timeless reality: retail behavior can be both predictable and powerful, but without careful research, it can also be costly. Disclaimer : This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses. Follow us on Twitter , Facebook , Telegram , and Google News The post Raoul Pal: XRP is the Moron Trade. Here’s What It Means appeared first on Times Tabloid .
