Grayscale Research Lead Highlights ETH, SOL, and BNB

Why Grayscale Believes Classic Altcoins Still Matter

Many crypto traders are currently chasing privacy coins and specialized trading platforms. However, major smart contract networks might actually offer significant long-term value that many traders are overlooking.

Zach Pandl, the head of research at Grayscale, recently shared that top networks like EthereumETH+1.06%, SolanaSOL+1.85%, and BNBBNB+1.04% Chain are currently not a consensus trade among crypto-native investors. That means many active traders are looking elsewhere for short-term gains.

Despite this shift in market attention, Pandl offered clear advice to crypto investors: don't sleep on the classics. He believes these established core networks remain essential as traditional finance transitions to blockchain technology.

Real-World Assets Require Core Infrastructure

Pandl's positive view on established networks rests heavily on where traditional financial institutions are heading. He expects trillions of dollars in traditional assets to eventually transition on-chain over the coming years.

This massive shift toward blockchain rails will require reliable smart contract platforms to support several key financial products:

• Tokenized real-world assets like real estate and treasury bonds
• Fiat-backed stablecoins used for global daily transactions
• Tokenized bank deposits for seamless institutional transfers

While many crypto-native traders focus heavily on short-term privacy tokens or revenue-generating platforms, Pandl highlights that ignoring foundational networks could be a missed opportunity.

These three networks have an absolute key role to play in a crypto portfolio.

Zcash and the Demand for Financial Privacy

Even while advocating for classic layer-1 platforms, Pandl maintains a positive view on privacy assets like Zcash. Grayscale already offers dedicated investment products tied to Zcash.

Pandl pointed out an interesting dynamic between traditional finance and crypto. For years, the crypto industry exported breakthroughs like stablecoins and perpetual futures to Wall Street. Now, crypto needs to import financial privacy from traditional finance.

In regular banking, people naturally expect their monthly salaries, outstanding debts, and personal tax records to remain completely confidential. Pandl expects Zcash to continue capturing market share among privacy coins, while privacy features will likely expand across smart contract platforms, stablecoins, and perpetual markets.

The Spread of Perpetual Futures and HyperliquidHYPE+2.29%

Pandl also noted that perpetual futures are set to become standard trading instruments for both retail and institutional traders. He pointed to Grayscale's Hyperliquid ETF for U.S. investors as clear evidence of growing demand.

For major financial firms, the main open questions are regulatory. Institutions want clarity on whether they can use platforms like Hyperliquid to hedge balance sheets or execute carry trades. Fortunately, Pandl credited the Commodity Futures Trading Commission with making steady regulatory progress.

BitcoinBTC+1.48% Bottoms and Market Resilience

Looking at the overall crypto market, Grayscale estimates that Bitcoin hit its local bottom near $58,000 in late June. Since then, asset prices have shown solid resilience despite several macroeconomic challenges.

These challenges included Federal Reserve interest rate hikes, rising long-term bond yields, and the failure of the CLARITY Act to pass. The market's ability to bounce back suggests that crypto was temporarily oversold during the summer.

Pandl also linked part of the summer sell-off to pressure on Stretch, the preferred product issued by Strategy. That pressure peaked around Bitcoin's June low, but as Stretch moved back toward its $100 target price, broader market concerns eased.

Past performance of digital assets or past performance of an entity is not a guarantee of future returns or future performance. Investors should always keep market volatility in mind.

What Federal Reserve Interest Rates Mean for Crypto

Regarding central bank policy, Pandl does not expect an immediate interest rate hike prior to upcoming elections, though a single rate increase in December remains possible.

Even if rates move slightly higher, Pandl believes Bitcoin can easily absorb one to three small rate increases. Current conditions are nowhere near the aggressive 500 basis points of rate tightening seen throughout 2022 and 2023.

He explained that recent interest rate pressures are largely driven by heavy government spending and massive corporate investments into artificial intelligence infrastructure, rather than systemic weakness in the crypto market.