AI rout hits software stocks, but Grayscale says blockchains stand to benefit

Blockchains and artificial intelligence are complementary technologies, according to crypto asset manager Grayscale, even as markets have recently treated them as part of the same trade.

Zach Pandl, Grayscale’s head of research, said that while disruptive technologies tend to produce clear winners and losers, the relationship between AI and blockchain is more symbiotic than competitive. Rapid AI adoption is expected to reward some industries, such as chipmakers, while pressuring others, including segments of professional services.

“Although crypto valuations have been tightly correlated with the drawdown in software stocks, we think blockchains and AI are complementary from a fundamental standpoint,” he said in the Wednesday blog post.

U.S. equity markets have lately focused on the downside. The S&P 500 software index has fallen roughly 20% year to date, and crypto valuations have moved closely with the selloff. But Pandl maintains that the parallel drawdown obscures a more constructive long-term dynamic between the two technologies.

Investor anxiety about artificial intelligence’s disruptive potential has sparked a broad sell-off in tech and software stocks, erasing significant market value as traders reassess long-held valuations.

U.S. software and services shares have plunged sharply, wiping out roughly $1 trillion in market capitalization, as fears mount that fast-advancing AI tools could upend traditional business models and revenue streams.

The S&P 500 software index has slumped as investors rotate out of high-flight tech names amid heightened volatility and skepticism over how quickly and profitably AI adoption will play out.

Pandl contends that blockchains are likely to become the financial rails for AI agents. Today’s chatbots operate largely outside the financial system. But if AI agents are equipped with digital wallets, he expects them to transact over blockchains rather than traditional bank infrastructure.

Blockchains offer transparency, near-instant settlement, 24/7 availability and global reach with an internet connection, he said. While opening a bank account requires a human intermediary, any user, including a bot, can create a blockchain address. Pandl said rising volumes of low-value stablecoin transactions would be an early signal that this thesis is playing out.

At the same time, he argued that blockchain technology could help mitigate some of AI’s risks. As large language models proliferate, concerns around data provenance, deepfakes and the concentration of control over resources and decision-making are likely to intensify. Public blockchains, Pandl said, can provide verifiable records and more decentralized infrastructure to counterbalance those trends.

The report acknowledged AI may also introduce new challenges for crypto networks. Advanced tools could make blockchain surveillance more effective, potentially eroding user privacy. AI agents may also uncover new vulnerabilities in smart contracts; OpenAI recently launched EVMbench, an initiative aimed at using AI to identify and patch such risks.

Read more: Crypto isn’t losing to AI, its just ‘capitalism doing its job,’ says Dragonfly