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Is This a Good Time to Buy Bitcoin?

Grayscale Research advocates for considering Bitcoin in diversified portfolios and generally discourages investors from trying to time the market. Nonetheless, we often receive a simple question: how do I know if it’s a good time to buy Bitcoin? Because Bitcoin is a commodity, not a cash-flow-paying asset like stocks and bonds, many investors struggle with the tactical decision, and this holds them back from making any allocation at all.

No one knows for sure how Bitcoin will perform in the future. But to decide whether the current price may be an attractive entry point, consider these three questions:

Is the structural adoption trend intact? We think so, given unchecked government debt growth, rising use of blockchain technology across financial services, and a generational shift in portfolio construction.

Where are we in the market cycle? Like many commodities, Bitcoin has recurring bull and bear market phases (Exhibit 1). We are currently 10 months into the latest Bitcoin bear market. Past bear markets have lasted 11-12 months.1

What is the outlook for macro risks? Like virtually all major assets, Bitcoin’s price is influenced by macro variables, including real interest rates. If the Fed hikes rates in the near future, Bitcoin’s price may have more downside. If not, we may have already seen the bottom.

To put a fine point on it: As we ourselves consider the questions above, we think all three suggest current prices may offer a favorable entry point for investors with long-term horizons. The structural adoption trend is intact, we are deep into the bear market, and the macro outlook looks broadly favorable. Of course, time will tell.

Key Takeaway: Investors trying to determine if now is a good time to buy Bitcoin should consider structural adoption trends, the state of the cycle, and macro risks. We think all three factors combine to make this a favorable entry point for investors.

Exhibit 1: The current Bitcoin bear market is getting a little long in the tooth

Based on the mean and median of the four prior cyclical bear markets. Source: Grayscale Investments, based on data from Coin Metrics. Data as of August 2026.

SEC’s “Reg Crypto” Lays Groundwork for Token-Based Fundraising

The Securities and Exchange Commission (SEC) proposed, on August 18, Regulation Crypto Assets (“Reg Crypto”), a new set of rules for entrepreneurs to raise capital on blockchain infrastructure. This is not about tokenizing stocks—the process of moving existing public equities onto blockchain rails. This is about newly issued tokens as a type of capital formation. If permitted within the US financial system, growth in token-based fundraising may drive value to blockchain networks like Ethereum, Solana, and BNB Chain.

Fundraising through token offerings already exists but has been hindered by regulatory ambiguity. Famously, during the 2017-18 crypto cycle, many startups used initial coin offerings (ICOs) to raise capital (Exhibit 1). More recent iterations have included initial exchange offerings (IEOs) and initial DEX1 offerings (IDOs)—all of which deliberately took place overseas and were not offered to US investors. There is already well-known academic research examining the potential benefit of tokens for new capital formation.

While there has been apparent demand for new token offerings, there is currently no clearcut path for would-be issuers to come to market under existing US securities laws. This is what Reg Crypto is intended to address. It would create a tailored regime for issuing tokens up to certain fundraising limits upon satisfying eligibility and disclosure requirements. It also acknowledges that some crypto protocols can eventually become automated and decentralized, such that registration and disclosure requirements may no longer apply—building on the agency’s March 2026 interpretive guidance.2

The proposed rules would substitute for parts of the CLARITY Act, which now looks less likely to pass the Senate. Commissioner Uyeda said that Reg Crypto is partly intended to reduce the incentive for issuers to move offshore—a potential risk without clear guidelines in the US. A separate “innovation exemption” from the SEC is also anticipated later this year.3

The bottom line for investors is that token-based fundraising is a potentially important use case of public blockchain technology—like stablecoins, tokenized securities, and decentralized exchanges. If the new rules can stimulate more issuance activity, that will bring more US issuers and investors onchain and likely drive value back to the underlying blockchains and their native tokens, including ETH, SOL, and BNB.

Key Takeaway: The SEC has proposed Reg Crypto, a set of rules that would facilitate token-based fundraising. This blockchain use case has been hindered by regulatory ambiguity, but the new guidelines could help unlock and drive value to the underlying networks, such as Ethereum, Solana, and BNB Chain.

Exhibit 1: The ICO boom demonstrated the demand for token-based fundraising

Decentralized exchange (DEX).

The SEC distinguishes between tokens, which are generally not securities, and investment contracts, which are subject to regulation. Under Reg Crypto, the investment contract will cease if the issue “has completed or otherwise permanently ceased all essential managerial efforts.” This is known as the Investment Contract Safe Harbor.

The innovation exemption is expected to cover trading and market structure guidelines.

When Bitcoin Markets Go Quiet: A Herald for Change?

After a turbulent start to 2026, this summer has proved much calmer for Bitcoin price action. Spot BTC trading volumes and realized volatility have fallen to cycle lows, and markets have showcased a degree of headline fatigue. Options market pricing is consistent with calm waters over the near-term: 1-month implied volatility has slid to just 32% (vs YTD average of 42%).1

But quiet phases for BTC markets rarely last long. The last time trading volume and price volatility were this subdued was the summer of 2023—a period that ultimately marked the end of the prior bear market. Like this year, Bitcoin spent much of that summer rangebound, with investors waiting for a catalyst. As selling pressure from the prior cycle eventually faded, Bitcoin broke out of its summer range, gaining about 50% from the start of October through year-end.2

Today’s potential catalysts are different, but the setup rhymes: subdued trading, compressed volatility, and a market waiting for clarity on macro policy and regulatory advancement. Low action across markets is not necessarily a bullish signal on its own, but summer 2023 reminds us that quiet markets can coincide with important transitions beneath the surface. The current lull may also point to exhausted selling pressure, leaving Bitcoin oversold relative to past market conditions.

Key Takeaway: Bitcoin markets are quiet, but history suggests that lulls can still mark important turning points, as the fall of 2023 demonstrated.

Exhibit 1: Muted BTC spot trading volume and volatility are reminiscent of 2023

Glassnode. Based on at-the-money (ATM) implied volatility for options contracts expiring 1 month. Data as of August 13, 2026.

Glassnode. Data as of August 13, 2026. Past performance is not indicative of future results.

Ethereum and Solana Tokenomics Under Review

Ethereum and Solana—two of the largest blockchain networks powering stablecoins and tokenized assets—are considering changes to their tokenomics. The networks’ native tokens, ETH and SOL, are digital commodities priced through supply and demand. Both may introduce code changes that cut annual inflation and therefore reduce future token supply. All else being equal, lower supply growth may support higher prices.

In both cases, the changes are highly technical (see here for details), but the bottom line is that both ETH and SOL are becoming relatively scarce, and the proposals under discussion would result in lower inflation and even more scarcity.

Exhibit 1 compares estimated annual token supply inflation for Bitcoin (BTC), ETH, and SOL over the next five years, assuming the new changes are implemented. By the end of 2031, inflation for both BTC and ETH would be just ~0.4% per year, and for SOL just ~1.1% per year. This compares to annual supply inflation of 1.8% for gold1 and 3.3% for US CPI inflation.2

The proposed changes are currently being debated by their respective communities. The Solana proposals seem to have broader agreement and have a better chance of being implemented.

If the changes go through, token holders who stake would receive fewer tokens, because staking rewards are paid through new token inflation. However, with fewer tokens in circulation, scarcity value may increase, putting upward pressure on prices. Holders of unstaked ETH and SOL could be better off. Whether stakers are better off depends on the net effect of lower token rewards and potentially higher token prices.

Key Takeaway: ETH and SOL are digital commodities powering two of the leading blockchains for stablecoins and tokenized assets. Changes under consideration would increase the scarcity of both assets and could put upward pressure on prices.

Exhibit 1: Changes to Ethereum and Solana would reduce token inflation

Source: World Gold Council, Grayscale Investments. Estimate is annualized percent change in above ground gold stock from 2015-2025. Data as of August 2026.

Source: BLS, Grayscale Investments. Estimate is annualized percent change in US CPI in the ten years ending June 2026. Data as of August 2026.

Three Reasons Why Bitcoin Adoption Will Keep Rising

Bitcoin’s price has begun to stabilize, and we may be nearing the end of the latest bear market. Regardless of how the short-term price action plays out, we see a few key reasons why Bitcoin adoption can continue rising over the medium- and longer-terms (Exhibit 1):

1. Unchecked government deficits: continued unsustainable government debt growth raises the risk of persistent inflation and currency debasement, and could drive increasing numbers of investors of all types to scarce assets and alternative stores of value.

2. Adoption of blockchain technology: stablecoins and tokenization will make blockchains ubiquitous across financial services, in our view. 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.

3. Generational change in portfolio construction: younger investors have a much bigger appetite for digital assets, and alternatives are now a standard part of portfolios. We expect institutions, wealth management platforms, and individuals to continue incorporating Bitcoin into diversified portfolios through exchange-traded products (ETPs) and other vehicles—a process already well underway.

Key Takeaway: The Bitcoin bear market has not changed our expectation for rising Bitcoin adoption over time. We believe that adoption will be driven by more demand for scarce assets, greater adoption of blockchain technology, and generational change in portfolio construction.

Exhibit 1: The number of Bitcoin holders continues to rise

Why AI Needs Blockchain Technology

Artificial intelligence and public blockchains are complementary. As AI creates demands that traditional systems were not designed to meet, public blockchains offer new solutions (Exhibit 1). We have identified three areas where we believe the adoption of AI will create the most demand for blockchain technology: agentic finance, record keeping for computation and reputation, and decentralized AI alternatives.

Payments and finance provide the clearest examples. To act on our behalf, AI agents will need programmable wallets that can hold and deploy capital without intermediaries. Their activity will drive demand for micropayments, instant cross-border settlement, and automated trading and risk management. Public blockchains like Ethereum and Solana enable exactly this.

AI agents also create the need for verifiable records of computation, online human identity, and agent reputation. As enterprises delegate more decisions to AI, they will need to verify how those decisions were produced—including which models, data, and rules an agent used. Users, meanwhile, must be able to distinguish humans from agents online; for example, a social network may need to verify that an account represents a unique person without requiring that person to reveal their identity. Agents will also need trusted records of reputation before performing high-stakes tasks such as making investments or purchasing goods on a user’s behalf. Public blockchains—and applications built on them, such as Worldcoin's identity service—can anchor these records in transparent, neutral infrastructure rather than place them under the control of a single corporation or government.

Finally, decentralized networks offer an alternative to centralized AI ownership and governance. AI is concentrating capital, compute, and control among a handful of frontier labs and hyperscalers, raising concerns about governance, bias, and censorship. Decentralized networks like Bittensor offer a fundamentally different approach: global, open AI ecosystems that anyone can access, contribute to, and own a stake in.

Key Takeaway: AI adoption will increase demand for public blockchains as programmable financial infrastructure; a verifiable record layer for computation, identity, and reputation; and a foundation for open, user-owned AI ecosystems.

Exhibit 1: Public blockchains can meet the emerging needs of the AI economy

How Crypto Can Move Forward Without CLARITY

An agreement on the CLARITY Act, the bipartisan crypto market structure bill, is technically still possible. But the realities of the Senate calendar and of election year politics mean the chances of passage this year now appear low.

Fortunately, CLARITY not passing won’t have an immediate impact on the functioning of major blockchains, the demand for Bitcoin as a store of value, or on the growth of stablecoin payments. The legislation would have provided a more comprehensive rulebook for digital assets in the US, but the industry has moved forward for almost 17 years without it.

However, the lack of comprehensive market structure legislation could hold back new investment activity in the United States. The CLARITY Act created a new path for capital formation using blockchain technology, included measures to support the growth and development of tokenized securities markets, and created a comprehensive oversight framework for digital asset intermediaries. It also offered a long list of other protections for consumers, investors, and software developers. The legislation was a sensible, tradfi-like rulebook for digital asset markets in the US, and this looks like a missed opportunity.

Under the current administration, regulatory guidance has already supported the digital assets industry in many ways, including through new rules around institutional custody, improved access to banking, clear policies around staking, and a framework that has stimulated growth in crypto exchange-traded products (ETPs). This will continue without the law, and investors should expect the SEC and other regulators to fill in the blanks with rulemaking over the coming months, especially around tokenized securities. The SEC’s interpretative guidance on the application of Federal securities laws to crypto assets was already a big step forward for the industry.

Even with more agency rulemaking, the lack of fulsome market structure regulation in the US may drive entrepreneurial activity overseas on the margin—due to friendlier token issuance rules, developer protections, and other factors. This trend, already in place, had partly reversed at the start of the Trump Administration but could resume (Exhibit 1).

Key Takeaway: Crypto will move forward without CLARITY, supported by expected rulemaking by the SEC and other regulators. However, without comprehensive market structure rules, a greater share of new investment may occur overseas, in our view.

Exhibit 1: Developer activity had shifted overseas before the Trump Administration

Younger Investors Are Looking Beyond Stocks and Bonds

The global alternatives market has grown nearly seven-fold since the 2008 Global Financial Crisis, as investors increasingly look beyond traditional public equities and fixed income.1 Private equity, private credit, hedge funds, real assets, and crypto continue to represent a larger share of global portfolios (Exhibit 1).

Generational allocation preferences suggest this trend could strengthen as wealth changes hands. A BofA survey of high-net-worth individuals found that investors ages 21 to 43 allocate 53% of their portfolios outside traditional stocks and bonds, compared with 26% among those over age 44.2 With more than $100 trillion expected to transfer to younger generations over the coming years, this stronger preference for alternatives could create a durable tailwind for crypto.

One explanation for the shift is that alternatives have become easier to access. New products and platforms allow investors to invest in the asset class without the specialized infrastructure or expertise historically required. Crypto has followed a similar path, as regulated investment products like Bitcoin exchange traded products (ETPs) and institutional market infrastructure have introduced more streamlined and familiar ways to gain exposure. Combined with strong historic returns, these lower barriers have helped attract more capital to alternative assets.

Key Takeaway: Rising allocations to alternatives – particularly among younger investors – may support continued growth of the crypto asset class.

Exhibit 1: Alternative assets have become a larger part of global markets

Preqin, based on 2025 estimates.

https://newsroom.bankofamerica.com/content/newsroom/press-releases/2024/06/bofa-private-bank-study-of-wealthy-americans-finds-generational-.html

Assessing the Impact of Recent Bitcoin Self-Custody Losses

Users of the Bitcoin self-custody wallet Coldcard suffered losses in recent days as hacker groups discovered and exploited a vulnerability in the wallet’s software.¹ Estimates suggest hackers have so far drained ~1,400 BTC (~$90mn) from user wallets. The incident is an unfortunate setback for Bitcoin self-custody, which is critical to the healthy functioning of the Bitcoin network in the longer-term, in our view.

However, there are several mitigating factors investors should keep in mind:

Bitcoin itself was not hacked. The security vulnerability affected one specific Bitcoin wallet provider, not the Bitcoin blockchain. To date, Bitcoin’s cryptography and consensus layer have never suffered a lasting successful security compromise.

Cybersecurity losses have trended lower. Crypto cybersecurity losses are on track to total roughly $1.7 billion this year. While a large number in absolute terms, this is the lowest level in nine years and just ~0.1% of aggregate crypto market capitalization (Exhibit 1).²

Bitcoin ETPs provide alternative custody options. Bitcoin exchange-traded products (ETPs) use institutional custody arrangements, which typically include segregated offline storage, multi-signature wallets, SOC attestations, and insurance policies. These vehicles may be attractive to institutional investors and/or individuals who prefer to avoid the complexity of Bitcoin self-custody.

Key Takeaway: Recent security incidents are an unfortunate setback for Bitcoin self-custody, but they did not affect a) the blockchain itself, or b) any BTC held in commingled vehicles (such as ETPs and ETFs). Cybersecurity losses have also trended lower over time, and other robust custody options are available for investors.

Exhibit 1: Crypto cybersecurity losses are in long-term decline

The vulnerability related to insufficient randomness or “entropy” in the creation of seeds and therefore private keys. See the report from Square Engineering for technical detail.

The Coldcard exploit was the third largest crypto cybersecurity exploit this year (after KelpDAO and Drift), and roughly the 30th largest of all time. Source: https://rekt.news/leaderboard

Onchain Vaults: The Next Evolution in Managed Credit

Innovations from the crypto industry are arriving in traditional finance, including stablecoins, tokenized assets, and perpetual futures. In our view, the next innovation to break through to the mainstream will be onchain vaults.

Vaults are a vehicle for onchain asset management. The vault structure is highly flexible, but many vaults operate with specific investment parameters and hold yield-generating assets. In the context of traditional finance, vaults closely resemble CLOs (collateralized loan obligations). Like CLOs, vaults pool investor capital into professionally managed portfolios designed to maximize risk-adjusted returns and distribute cash flows generated by the underlying assets (Exhibit 1).

The difference is that vaults are fully onchain. They use smart contracts rather than trustees and custodians, and settle transactions natively on blockchain networks like Ethereum, Base, and Solana. This means that vaults can offer full transparency, operational efficiencies, and potentially higher liquidity.

There are currently about $7 billion in assets invested in more than 3,000 vaults managed by 57 curators, 79% of which are focused on stablecoins (Exhibit 1).1 By comparison, the CLO market totals roughly $1.5 trillion across thousands of vehicles managed by more than 250 firms.2

As onchain credit markets mature, vaults are emerging as a foundational investment vehicle for digital assets, serving a role similar to CLOs and other actively managed credit products in traditional finance. However, US securities regulation remains a key source of uncertainty, particularly where investors might rely on a curator to actively manage the vault.

Key Takeaway: Vaults, a structure for onchain asset management, may be the next crypto innovation to break through to the mainstream.

Exhibit 1: Onchain vaults are similar to – but different from – CLOs

Blockworks, Vault Dashboard. As of July 23, 2026.

CLO Premium, Manager Concentration in US BSL, MM and EU CLO Markets. As of February 14, 2026.