“No Need to Panic”: Grayscale Backs Bitcoin Growth Amid Market Dip

Bitcoins recent retreat from its all-time high of over $100,000 has raised concerns among investors, especially after a Federal Reserve-triggered selloff. However, Zach Pandl, the Director of Research at Grayscale, tried to calm down the market stating that, short term volatilities should not overshadow the long term prospects of Bitcoin.

In an interview, Pandl noted the supportive macroeconomic fundamentals, the institutional adoption of BTC, and the development of regulations as key catalysts for the further growth of the BTC market.

Grayscale Exec Says, Macroeconomic Trends Set the Stage for Bitcoins Growth

Bitcoins price has been influenced by the most recent rate cut by the Federal Reserve and a more cautious approach to future cuts. The Grayscale Exec said, “Theyre still cutting rates… but they signaled maybe fewer rate cuts next year.”

This made the dollar stronger and put temporary pressure on those assets that are similar to the dollar like Bitcoin and gold. However, according to Grayscales Pandl, more central banks are cutting rates, which is a positive environment for Bitcoin.

According to Pandl, the volatility experienced recently is proof that Bitcoin is here to stay and is only growing in its significance in the world of finance. He said,

“Bitcoin is not an isolated asset in the financial market.”

As it reached a market capitalization of $2 trillion, Bitcoin has become as liquid as the euro and yen, thus becoming an indispensable part of the global financial system.

Pandl expects the macroeconomic landscape, coupled with the adoption factors, to underpin the strength of Bitcoin. He pointed to ETFs and positive political stance towards cryptocurrencies in the United States as factors that can enhance the BTC adoption and price in the next few years.

Bitcoin Market Dynamics and Altcoin Opportunities

According to Pandl, the current price trend of Bitcoin is typical of an intermediate stage in the market cycle. He noted that the Bitcoin share in the total crypto market capitalization is already falling, which is typical for previous cycles.

“Were probably at a phase where Bitcoin dominance should be coming down,” he said, adding that this may lead to an “altcoin season”.

In the case of altcoin outperformance, according to Pandl, the same potential gives investors a possibility to diversify their investment amidst cryptocurrencies. “Altcoin season is always good for the majority of our investors,” he continued. This mentality is indicative of the changing perspective from the sole focus on Bitcoin, and other potential blockchains, as institutional investors venture into the cryptocurrency space.

However, Pandl opined that, although there might be short-term volatility in Bitcoin‘s market share, this digital currency is here to stay as one of the industry’s pillars. He said that it has a role to play in the ‘long only’ strategies, especially in the traditional pools of capital such as pensions, endowments, and sovereign wealth funds, which he said is ‘natural’ for Bitcoin.

Regulatory Shifts and Institutional Adoption on the Horizon

The Grayscale exec stressed out the major policy shifts expected to occur in the next four years of the new U.S. administration, which he referred to as a ‘’big turn‘’ in the policy. These changes could offer much needed clarity for the crypto market with regards to staking as well as institutional adoption. I dont see anything wrong with staking.

We just need clear rules around that, Pandl emphasized, noting that providing more guidance in the matter would open up new ways for institutional investors to invest.

Institutional adoption is still the main story of Bitcoins development, with large investors such as pensions and sovereign wealth funds predicted to enter the market.

According to the Grayscale exec, this is because Bitcoin is now a $2 trillion asset class, which has the potential to lure these institutions. He said that the future regulation would enhance the integration of Bitcoin with traditional financial systems as more people take the digital currency.