Crypto-Native Traders Overlook Core Infrastructure, Grayscale Research Head Says
Crypto enthusiasts are currently flocking to niche assets like Zcash and the decentralized derivatives exchange Hyperliquid. However, Grayscale’s head of research, Zach Pandl, suggests that the more significant investment opportunity lies in the large smart contract networks that these traders are overlooking. Pandl noted that Ethereum, Solana, and BNB Chain are not currently considered “consensus trades” among crypto natives. His advice to investors: “don’t sleep on the classics.”
Why Ethereum, Solana, and BNB Chain Are Pandl’s Top Picks
Pandl’s conviction stems from his outlook on the future of traditional finance. He anticipates trillions of dollars in assets migrating onto the blockchain, with the vast majority of this activity requiring a smart contract platform. These platforms will be essential for a range of applications, including decentralized finance (DeFi), non-fungible tokens (NFTs), and gaming.
He observed that many crypto-native investors are focusing on privacy tokens and revenue-generating projects, while neglecting the foundational infrastructure. Pandl emphasized that the three major networks—Ethereum, Solana, and BNB Chain—have “an absolute key role to play in a crypto portfolio.”
Zcash: Privacy Moves Into The Mainstream
Pandl maintains a positive outlook on Zcash, for which Grayscale offers investment products. He argued that the crypto industry has spent years exporting innovations like stablecoins and perpetual futures to Wall Street. Now, he believes, crypto needs to import financial privacy from traditional finance, where individuals expect their salaries, debts, and tax payments to remain confidential.
He predicts that Zcash will continue to gain market share among privacy-focused cryptocurrencies. Furthermore, Pandl anticipates that privacy tools will become integrated into smart contract platforms, stablecoins, and perpetual futures markets, calling privacy “a huge part of the next cycle.”
Hyperliquid and The Spread of Perpetual Futures
Pandl views perpetual futures as poised to become a standard financial instrument for both institutional and retail traders. He cited Grayscale’s own Hyperliquid ETF for U.S. investors as an indicator of growing demand. For firms like Grayscale, the key outstanding questions revolve around regulatory clarity, particularly concerning their ability to use these platforms for hedging balance sheets or executing carry trades. He acknowledged the Commodity Futures Trading Commission (CFTC) for making progress on these regulations.
Grayscale Thinks Bitcoin’s Bottom Is In
Pandl’s broader market assessment is optimistic. Grayscale estimates that Bitcoin reached its bottom near $58,000 at the end of June. He pointed out that prices have since recovered, despite a mixed recent news cycle. This resilience, he suggested, indicates that the crypto market was oversold during the summer. He also noted that institutional clients continue to acquire Bitcoin and Ethereum ETFs as long-term portfolio diversifiers.
Pandl also attributed some of the summer sell-off to pressure on Stretch (STRC), a product issued by Strategy. This pressure reportedly peaked around Bitcoin’s late-June low. As STRC has since moved back towards its $100 target price, he stated, concerns about tail risks have diminished.
What The Fed Means For Altcoins
Pandl does not anticipate another Federal Reserve interest rate hike this month, deeming such a move just before an election “a bit bold.” However, he acknowledged that one more increase in December is possible. Even so, he believes Bitcoin can absorb one to three small hikes, as the scale of tightening expected is far less than the 500 basis points seen in 2022 and 2023. He attributed the current higher interest rates to significant borrowing by both the government and private companies funding artificial intelligence development.
