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Source: Grayscale; translated by Deng Tong, Golden Finance
AbstractThe shift in digital assets in the United States seems to have strengthened institutional confidence in the industry—leading to rebound in M&A activities, investment in stablecoins and asset tokenization, and other strategic investments in March. Although cryptocurrencies are a unique alternative asset class, valuations are still affected by widespread changes in macro prospects and/or investor risks. However, the weaker economic outlook has been partially included and we do not expect significant spending cuts, a broader trade war or a recession. Therefore, Grayscale Research continues to consider the basic prospects for cryptocurrencies to be good markets. The decline in valuation since the beginning of the year provides an attractive potential entry point category for building long-term positions in the asset.
In March 2025, cryptocurrencies saw a slight decline, but there were many signs that institutional activity was accelerating this month—continuing the ripple of the November U.S. elections began. After recent changes in U.S. crypto, institutions appear to have enough confidence in the medium-term outlook to make large-scale investments in digital assets. It fell 5% in March, while Bitcoin’s price fell 2% (Chart 1). It was also a challenging month for traditional assets: U.S. stocks fell, with large tech and cyclical stocks leading the decline; global fixed income markets also generated negative total returns. Meanwhile, the U.S. dollar depreciated against the euro and gold. Historically, the price of Bitcoin has been positively correlated with the wide range of stock indexes and negatively correlated with the value of the US dollar. [1] Therefore, the mixed rise and fall of cryptocurrencies in March (both stocks and the US dollar fell) looks roughly consistent with the historical correlation.
Figure 1: The cryptocurrency valuation remained basically unchanged in March 。 Cryptocurrency Exchange Kraken announces US$1.5 billionYuan acquires futures trading platform NinjaTrader, the largest cryptocurrency M&A deal to date. [2]This move will enable Kraken to provide regulated cryptocurrency futures and other derivatives in the U.S. market and overseas. Meanwhile, Bloomberg reported that Coinbase is in-depth negotiations on the acquisition of cryptocurrency derivatives platform Deribit, the leader in cryptocurrency options trading. Based on recent valuations, this could be a bigger deal. [3] Several large-scale venture capital rounds were also conducted that month, including companies such as Sequoia Capital invested $400 million in the TON Foundation, and Abu Dhabi sovereign wealth fund MGX invested $2 billion in Binance. [4] Grayscale Research estimates (using Messari’s data), the crypto industry has raised about $10 billion in total over the past two quarters, compared with $3.5 billion in the first two quarters (Figure 2)�
Figure 2: Increased fundraising activities since the U.S. election
Secondly, more and more institutions have begun to get involved in the stablecoin field before the U.S. Congress may have legislation this year (Figure 3). For example, according to news reports, both Fidelity and President Trump’s World Free Finance plan to launch a dollar-backed stablecoin. [5] Several large fintech companies have also entered the stablecoin business. In a deal concluded last February, payment technology provider Stripe acquired Bridge, a stablecoin infrastructure expert. [6] Similarly, PayPal launched its own stablecoin (PYUSD) in August 2023, with a market capitalization of approximately $725 million, and news reports say Revolut plans to launch stablecoins in the future (except for stablecoins, which Revolut last month expanded to mobile users). [7]
Figure 3: Congress may soon pass stablecoin legislation� Third, the tokenization of real-world assets (RWAs) is heating up (see the Public Blockchain and Tokenization Revolution for background). Total assets (excluding stablecoins) in March reached a record $19.5 billion, according to data platform RWA.xyz. [8] This increase mainly reflects the growth of BlackRock’s tokenized Treasury bond product BUlDL, which has a market capitalization of nearly $2 billion (Figure 4). The growth of tokenized assets may lead to increased demand for “Institutional DeFi” (decentralized finance) applications, and recent news shows investment in related infrastructure. For example, Coinbase announced the creation of a verified pool—essentially a decentralized exchange (DEX) structure with a verified identity—and Securitize has partnered with Ethena to launch a blockchain that provides “compliant access to DeFi.” [9] The Securitize / Ethena project will involve a variety of other industry partners, including Maple Finance, which was recently highlighted in GrayscaleResearch Top 20.
Figure 4: Tokenized assets hit record high� [10] Strategy (formerly MicroStrategy) which pioneered this approach, purchased another 29,000 bitcoins (-$2.4 billion) in March 2025, and has accumulated more than 275,000 bitcoins (about $23 billion) since announcing its current purchase plan in November. Many bitcoin miners now also keep bitcoins on their balance sheets (even buying bitcoins on the open market); MARA, the largest mining “holder”, bought another 715 bitcoins (about $60 million) last month and began selling $2 billion in stock to fund future purchases. [11] At the end of March, video game retailer GameStop said its board of directors had approved Bitcoin as a treasury reserve asset. [12] Other recent corporate Bitcoin buyers include video sharing platform Rumble and energy storage company KULR.
Lastly, the United States established a strategic Bitcoin reserve in an executive order issued on March 6 [13]. President Trump established this reserve in part because he had a strategic advantage to be one of the first to view Bitcoin as a reserve asset. The order requires that the reserve be capitalized by all Bitcoin currently held by the institution, Bitcoin is “not allowed to be sold”, and the Finance Minister and Commerce Secretary “should develop strategies to acquire more” Bitcoin. In addition, the command creates a "digital asset reserve" that will hold (and possibly liquidate) digital asset positions other than Bitcoin; it also instructs the institution to conduct a comprehensive accounting of any digital assets it holds. It is estimated that the United States currently has 103,000Bitcoin ($8.7 billion) and about $400 million in other digital assets. [14]
The announcement of the strategic Bitcoin reserve initially disappointed some market participants as it was not included in the immediate purchase of new Bitcoins in the open market. We think this is short-sighted. Viewing Bitcoin and public blockchain technology as strategic importance may force others to reconsider its crypto industry — which could accelerate global adoption. The most noteworthy thing in this regard is . Currently, most crypto activities are prohibited, including transactions and mining, but holdings of crypto assets are allowed. Interestingly, in February, the Supreme Court and other judiciary discussed how to deal with encryption in future legal cases—a sign that regulators may be revisiting legal handling of digital assets. If restrictions on encryption are relaxed, global adoption of Bitcoin may be greatly promoted.
Faced with macro risks While cryptocurrency fundamentals appear to be improving, valuations have fallen by about 30% so far this year based on our market capitalization-weighted cryptocurrency industry index. Cryptocurrencies are a unique alternative asset class that is relatively low in correlation with stock returns, but the market is still affected by widespread changes in macro outlook and/or investor risk appetite.
Recent market volatility has largely been caused by changes in the United States. In the coming years, Trump’s decisions will have a wide range of economic impacts, many of which may have a positive impact on productivity growth, employment and corporate profits. However, the White House’s choice to pre-implement certain — including immigration restrictions, spending cuts and tariffs — could have a short-term negative impact on economic output. Therefore, economists have begun to lower their GDP growth forecasts this year, and listed companies have also begun to lower their earnings expectations. The downward trend in the short-term outlook has triggered a sharp correction in global stock markets and wider de-risk de-risk, ultimately putting pressure on Bitcoin and other crypto assets (Figure 5).
Figure 5: Bitcoin fell with stocks in the first quarter of 2025� But the market has repriced significantly, so the drag on growth from tariffs should at least partially offset. For example, the market value of the “Big Seven Tech Stocks” has fallen by more than $3 trillion since its mid-December high (a figure higher than the market value of the entire crypto asset class).
In addition, the Department of Efficiency (DOGE) cuts the short-term downside risk to growth may be exaggerated. The agency claims to save $130 billion (0.4% of GDP), but most of it must be deferred, and there is no evidence that the Treasury Department is reducing payments—in fact, total spending in the U.S. so far this year is currently higher than in 2023 and 2024 (Figure 6). The tax bill currently under consideration (“budget adjustment”) may include measures to reduce spending significantly, but it is unclear how much the cut will be to get enough support.
Figure 6: So far, there is little evidence of reduced spending
So Grayscale Research continues to believe that the basic prospects of the crypto market are good, reflecting both the positive fundamental trends in the digital asset industry itself and the trends generally supported by the macro market. In the event of a recession (caused by trade wars, substantial spending cuts and/or other factors), cryptocurrency valuations may drop further. But ifUncertainty is declining and the economy continues to remain strong, and cryptocurrency valuations are likely to rebound relatively quickly given the recent pullback and solid industry fundamentals. For investors who have not invested in cryptocurrencies before, we believe that the decline in valuation since the beginning of 2025 provides a potentially compelling entry point for establishing long-term positions in this asset class.
Note
[1] Source: Bloomberg, Grayscale Investment.
[3]Source: Bloomberg, Bloomberg
[4]Source: Forbes, Reuters
[5]Source: Financial Times, Reuters.
[6]Source: Stripe.
[7]Source: Artemis, CoinDesk, The Block. Data as of March 31, 2025.
[8]Source: RWA.xyz. Excluding the chart, the total is about $10 billion.
[9]Source: Coinbase, Security.
[10]All statistics in this paragraph are from bitcointreasuries.net.
[11]Source: CoinDesk.
[12]Source: GameStop.
[13]Source: White House.
[14]Source: Arkham Intelligence, CoinDesk, CoinTelegraph, Grayscale Investments. Grayscale InvestmentsThe calculated US Bitcoin holdings are 198,012 bitcoins in what Arkham Intelligence calls the US address, minus 94,643 bitcoins owned by Bitfinex. Data as of March 31, 2025.
