AI Rout Hits Software Stocks but Grayscale: Blockchains Win

The AI rout hammering software stocks has pulled crypto valuations into the same downdraft, but Grayscale contends blockchains are positioned to emerge as long-term beneficiaries. Zach Pandl, the crypto asset manager's head of research, argued in a Wednesday blog post that the selloff masks a symbiotic relationship between artificial intelligence and blockchain technology.

Software Stocks Lose $1 Trillion as AI Fears Spread

U.S. software and services equities have shed roughly $1 trillion in market capitalization as investors reassess whether fast-advancing AI tools will upend established business models, according to Grayscale's research. The S&P 500 software index has slumped approximately 20% year to date, reflecting a sharp rotation from high-flying tech names amid mounting volatility.

Crypto markets have not been spared. Digital asset valuations have tracked the software drawdown closely, with traders grouping blockchain tokens alongside battered tech shares. Pandl acknowledged the correlation but maintained it obscures a more constructive dynamic beneath the surface.

Why Does Grayscale Say AI and Blockchain Are Complementary?

Grayscale argues the two technologies are complementary rather than competing because blockchains solve problems that AI agents will increasingly face. While disruptive technologies typically produce distinct winners and losers, Pandl said the AI-blockchain relationship is cooperative. Rapid AI adoption is expected to reward chipmakers while pressuring segments of professional services, but blockchains occupy a separate role as enabling infrastructure.

Today's chatbots function largely outside the traditional financial system. Once AI agents gain access to digital wallets, Pandl expects them to transact over blockchains rather than conventional bank rails. Blockchain offers transparency, near-instant settlement, 24/7 availability, and global reach with an internet connection. A bank account demands a human intermediary, whereas any user, including a bot, can generate a blockchain address instantly.

Although crypto valuations have been tightly correlated with the drawdown in software stocks, we think blockchains and AI are complementary from a fundamental standpoint.

— Zach Pandl, Head of Research at Grayscale

Stablecoin Volumes as the Key Signal

Pandl identified rising volumes of low-value stablecoin transactions as the metric that would validate Grayscale's thesis. If AI agents begin conducting routine financial operations on-chain, the data should appear as a surge in small-denomination stablecoin transfers across public blockchains, distinguishing genuine adoption from speculative activity.

Blockchain technology could also mitigate some of AI's most pressing risks, Pandl argued. As large language models proliferate, concerns about data provenance, deepfakes, and concentrated decision-making power are expected to grow. Public blockchains offer verifiable records and decentralized infrastructure to counterbalance those threats, according to the Grayscale report.

What Are the Risks for Crypto Networks?

Not all AI-blockchain interactions will be positive, Pandl cautioned. Advanced AI tools could make blockchain surveillance significantly more effective, potentially eroding privacy protections that many crypto users value. AI agents may also uncover unknown vulnerabilities in smart contracts, creating new attack vectors.

OpenAI has already moved to address the smart contract risk, recently launching EVMbench, an initiative that leverages artificial intelligence to identify and patch security flaws in Ethereum Virtual Machine-based contracts. The project highlights how AI development is intersecting with blockchain infrastructure in ways that carry both promise and peril.

What This Means Going Forward

Grayscale's research challenges the prevailing narrative that the AI rout is uniformly negative for digital assets. While the S&P 500 software index selloff has pressured crypto prices in the near term, the fundamental case for blockchain as AI infrastructure remains intact, according to Pandl. Coming months will test whether stablecoin data supports Grayscale's outlook or blockchain networks stay tethered to the broader tech downturn.