Key Takeaways
- • Grayscale research head Zach Pandl says crypto investors are crowding into Zcash and Hyperliquid while undervaluing Ethereum, Solana and BNB Chain, which he views as core infrastructure for tokenized assets, stablecoins and tokenized bank deposits.
- • Pandl credits Zcash with a strong position in financial privacy and Hyperliquid with a leading role in perpetual futures, and expects perpetual futures to become a standard instrument for institutional and individual investors.
- • Corporate use of perpetual futures venues remains unsettled, with Pandl noting regulatory uncertainty over hedging balance-sheet risk and running carry trades, and saying the CFTC is making progress on those rules.
- • Grayscale estimates Bitcoin bottomed near $58,000 in late June; Pandl expects no rate hike this month but does not rule out one in December.
- • Pandl argues Bitcoin can absorb one to three modest rate increases, given that he does not anticipate a tightening cycle on the scale of the 500 basis points delivered in 2022 and 2023.
Summary
Grayscale research head Zach Pandl says crypto investors are crowding into Zcash and Hyperliquid while undervaluing the large smart-contract networks at the base of the market. In comments reported on October 19, Pandl said Ethereum, Solana and BNB Chain have yet to become a consensus holding among crypto buyers. He contends that investors chasing privacy tokens and yield-generating projects are neglecting the infrastructure layer, and that the role of those three networks in a portfolio deserves a fresh look.
The thesis rests on an expectation that trillions of dollars of conventional assets will migrate to blockchain rails, with most of that activity requiring smart-contract infrastructure. Pandl identifies tokenized real-world assets, stablecoins and tokenized bank deposits as the three key use cases, arguing that growth in these products would raise demand for the networks that settle transactions and host applications.
Pandl is not dismissive of the newer names. He credits Zcash with a strong position in financial privacy, noting that households expect salaries, debts and tax payments to remain confidential, and argues crypto should meet that expectation more convincingly. He expects privacy tools to spread into smart-contract networks, stablecoins and perpetual futures venues. On perpetual futures, he views them as on their way to becoming a standard instrument for institutional and individual investors; Grayscale's Hyperliquid ETF for U.S. investors is one signal of that interest. Still, he points to regulatory uncertainty over whether corporations can use such platforms to hedge balance-sheet risk and run carry trades, and says the Commodity Futures Trading Commission (CFTC) is making progress on those rules.
On Bitcoin, Grayscale estimates the token bottomed near $58,000 in late June. Pandl reads the subsequent recovery, despite Federal Reserve tightening, rising long-term Treasury yields and the failure of the CLARITY Act to become law, as a sign that summer selling may have gone too far. He cites continued institutional flows into Bitcoin and Ethereum ETFs, with such buyers treating the products as long-term diversification tools. He ties part of the summer pressure to Strategy's preferred instrument STRC, which peaked around Bitcoin's late-June low; as STRC trades back toward its $100 target, concerns about an extreme risk scenario have eased, he says.
On monetary policy, Pandl does not expect another rate increase this month, calling a move just before the election a bold step, but does not rule out a hike in December. He argues Bitcoin can absorb one to three modest increases because he does not anticipate a tightening cycle on the scale of the 500 basis points delivered in 2022 and 2023. Behind elevated rates he sees heavy government borrowing and private-company borrowing to finance artificial intelligence investment.
For investors, the message is a relative-value one: the networks that would carry tokenized finance may be cheaper than the themes currently in favor, even as privacy and perpetual futures remain live growth stories.
The thesis rests on an expectation that trillions of dollars of conventional assets will migrate to blockchain rails, with most of that activity requiring smart-contract infrastructure. Pandl identifies tokenized real-world assets, stablecoins and tokenized bank deposits as the three key use cases, arguing that growth in these products would raise demand for the networks that settle transactions and host applications.
Pandl is not dismissive of the newer names. He credits Zcash with a strong position in financial privacy, noting that households expect salaries, debts and tax payments to remain confidential, and argues crypto should meet that expectation more convincingly. He expects privacy tools to spread into smart-contract networks, stablecoins and perpetual futures venues. On perpetual futures, he views them as on their way to becoming a standard instrument for institutional and individual investors; Grayscale's Hyperliquid ETF for U.S. investors is one signal of that interest. Still, he points to regulatory uncertainty over whether corporations can use such platforms to hedge balance-sheet risk and run carry trades, and says the Commodity Futures Trading Commission (CFTC) is making progress on those rules.
On Bitcoin, Grayscale estimates the token bottomed near $58,000 in late June. Pandl reads the subsequent recovery, despite Federal Reserve tightening, rising long-term Treasury yields and the failure of the CLARITY Act to become law, as a sign that summer selling may have gone too far. He cites continued institutional flows into Bitcoin and Ethereum ETFs, with such buyers treating the products as long-term diversification tools. He ties part of the summer pressure to Strategy's preferred instrument STRC, which peaked around Bitcoin's late-June low; as STRC trades back toward its $100 target, concerns about an extreme risk scenario have eased, he says.
On monetary policy, Pandl does not expect another rate increase this month, calling a move just before the election a bold step, but does not rule out a hike in December. He argues Bitcoin can absorb one to three modest increases because he does not anticipate a tightening cycle on the scale of the 500 basis points delivered in 2022 and 2023. Behind elevated rates he sees heavy government borrowing and private-company borrowing to finance artificial intelligence investment.
For investors, the message is a relative-value one: the networks that would carry tokenized finance may be cheaper than the themes currently in favor, even as privacy and perpetual futures remain live growth stories.
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