Bitcoin Price May Be Battered, but Structural Adoption Story Still Intact: Grayscale

Bitcoin’s price has shown signs of stabilizing after a rough stretch, but even setting aside where prices go in the near term, asset manager Grayscale says adoption of the cryptocurrency over the medium and long run remains largely unchanged.

The reason: continued, unsustainable growth in government debt as a factor that keeps inflation and currency-debasement risk elevated. 

That backdrop, Grayscale argues, could push a widening range of investors toward scarce assets and alternative stores of value — a category where Bitcoin, with its fixed supply, is increasingly well positioned as a candidate.

It added that the adoption of stablecoins and tokenization are set to make blockchain infrastructure commonplace across financial services. Top banks and asset managers have piled into the tokenization space the past year and are fast adopting crypto technology. 

Grayscale argues that as that spreads, more banks, brokerages, and other intermediaries will have both the technical rails and regulatory clarity needed to hold and transact in Bitcoin — eroding the wall that has historically kept it structurally separate from mainstream finance.

“As the spread of the technology continues, many more intermediaries will have the necessary infrastructure (and regulatory clarity) to transact and store balances in Bitcoin — it will no longer be structurally apart from the rest of the financial system,” the note by the firm’s head of research, Zach Pandl, reads.