Grayscale CEO outlines 6 themes that will shape crypto market in 2021

Michael Sonnenshein, the newly appointed CEO of Grayscale Investments, believes 2021 will mark another pivotal year for digital-asset investing as institutional capital and nation-state adoption drive the next leg of the bull market.

In a keynote address at this year’s virtual CFC St. Moritz Conference, Sonnenshein identified three key investment themes that underpinned Bitcoin’s (BTC) dramatic breakout in 2020. They were: macroeconomic uncertainty and quantitative easing; legendary investors and brand-name companies investing in BTC; and the continued strengthening of regulatory frameworks around digital assets.

Sonnenshein believes 2021 will see a continuation of these trends as more investors diversify into Bitcoin and other digital assets. He also identified several others that could shape the digital currency market in the near future. 

According to Sonnenshein, the six themes that investors should look for in 2021 are:

  • Decreased career risk associated with digital-asset investing
  • Growing interest among financial advisers
  • The growth of North American and clean-energy crypto mining
  • Increased stablecoin integration
  • Nation-state adoption of digital assets
  • New regulatory developments

Regarding nation-state adoption, Sonnenshein speculated that this will likely include the piloting of central bank digital currencies, CBDCs, as well as the possibility of Bitcoin being added as a strategic reserve for some governments. 

On the topic of miners, he said that Foundry, a Grayscale sister company, has already become the largest cryptocurrency miner in North America.

Digital Currency Group, the company behind Grayscale and Foundry, revealed last year that it will invest $100 million into mining Bitcoin and other digital assets in North America.

Grayscale’s investment products have become a sort of bellwether for digital-asset adoption. The firm’s assets under management, or AUM, exploded from just $2 billion at the start of 2020 to more than $20 billion at the end of the year. That growth has yet to taper off, with total AUM reaching $28.1 billion on Jan. 19.

Holding roughly 3% of Bitcoin’s circulating supply, Grayscale appears to be having a gravitational pull on BTC’s price. JPMorgan Chase strategists led by Nikolas Panigirtzoglou believe the investment manager is key to Bitcoin returning above $40,000 in the near term. In order to get there, Grayscale would need to maintain a consistent pace of buying to the tune of $100 million per day.