The crypto market has faced a significant drawdown this year, extending the decline that followed the October market crash.

However, in its latest market commentary, Grayscale Investments noted that now may be an appropriate time for long-term investors to consider allocating to crypto.

Grayscale Report Highlights AI’s Resilience Amid Crypto Market Decline

Grayscale highlighted that the crypto markets saw a notable decline in early February, following the downturn in high-growth software stocks and other equity sectors tied to early-stage technology. Market data showed that during the first week alone, the total crypto market cap dropped by around 10.8%.

The market experienced a notable decline towards the end of the first week, with Bitcoin (BTC) falling to $60,000, while other major assets also saw significant losses.

The FTSE/Grayscale Crypto Sectors Index dropped 26% from January 30 to February 5. The report also revealed that the artificial intelligence (AI) segment emerged as the top performer in February among crypto sectors. The sector experienced a more modest drawdown compared to others.

Follow us on X to get the latest news as it happens

“The outperformance seemed due to renewed enthusiasm around AI agents — autonomous software that can work independently on your behalf to pursue a complex set of objectives. Technological innovation appears to be accelerating with the rise of agent-based systems, particularly OpenClaw — a locally hosted productivity assistant that became one of the fastest-growing open-source projects in history,” the report read.

Kite AI, centered on agent-native stablecoin payments, and Pippin AI, which develops on-chain AI agents, both saw strong performance.

However, Grayscale’s report indicated a rebound, with the FTSE/Grayscale Crypto Sectors Index recovering 4% by the end of the month. The report added that metrics such as trading volumes and implied volatility have also “settled down.”

Grayscale Identifies Key Reasons for Long-Term Crypto Allocation

With market conditions stabilizing, Grayscale presents three core arguments for long-term accumulation. First, is the relationship between blockchain and AI. The report asserts that AI and blockchain are complementary, not competing.

“In fact, blockchains will likely be the financial rails for AI agents, given certain advantages over traditional bank-based finance — as discussed in the popular report by Citrini Research on possible AI disruptions,” Grayscale wrote.

While crypto assets declined alongside software stocks amid the market slump, the report suggested that investors may eventually differentiate between technologies disrupted by AI and those that complement it.

Second, the report pointed to stablecoin and tokenization trends. According to Grayscale, regulatory clarity, including the passing of the GENIUS Act last year, is encouraging institutional investment in stablecoins and tokenized assets. Recent actions by companies like Meta, Stripe, and BlackRock further demonstrate the sector’s growth potential.

“In February, reports indicated that Meta may reinvest in stablecoins after shelving its Libra/Diem project amid regulatory headwinds, and Stripe said in its annual letter that ‘stablecoin payments are advancing quietly and inexorably as real-world uptake continues apace.’ Separately, BlackRock said it would integrate its tokenized money market fund BUIDL with UniswapX,” the report highlighted.

Although the Clarity Act is delayed in the Senate, Grayscale highlights that its potential passage could facilitate institutional capital inflows into the asset class.

Lastly, the firm stated that the US economy remains healthy, with some indicators suggesting further potential growth. While there is uncertainty regarding the new Fed Chair nominee, Grayscale views the overall macro environment as supportive of risk assets.

“Overinvestment in AI is a medium-term risk, but the pace of innovation remains rapid and there are still shortages of data center capacity. The market reacted negatively to the nomination of Kevin Warsh to replace Jerome Powell as Fed Chair, but we doubt he will be as hawkish in practice as some of his viewpoints while Fed governor (2006-2011) might suggest,” Grayscale said.

Thus, Grayscale Investments presents a compelling case for long-term crypto growth. However, investors must carefully assess their risk appetite and time horizon, as the crypto market’s unpredictability can affect short-term returns despite long-term opportunities.

Subscribe to our YouTube channel to watch leaders and journalists provide expert insights

BitMEX co-founder Ben Delo has pledged 20 million British pounds ($27 million) to the London Institute for Mathematical Sciences (LIMS), ranking it among the largest private donations ever made to a United Kingdom research institution outside Oxford and Cambridge, British magazine Times Higher Education reported on Tuesday.

The commitment includes $13.3 million paid upfront and a further $13.3 million to be released once the Mayfair-based institute matches the amount through additional fundraising, Times Higher Education reported. The gift launches a wider campaign aimed at building an $80 million endowment to secure LIMS’ long-term future, per the report.

“I would like to see LIMS winning Fields Medals and Nobel Prizes – they are already doing some world-class things and I want to help,” Delo told the magazine.

Delo said he chose to support LIMS over a larger university because it allows leading researchers to focus solely on research without teaching or administrative burdens.“They are also approaching research in an innovative way – even offering coaching on research,” he said, while criticizing UK’s “lacklustre and inconsistent approach to scientific funding.”

Related: New donation widget lets creators accept crypto payments 24/7

Delo paid $10 million fine before receiving Trump pardon

Delo, who co-founded crypto exchange BitMEX in 2014, pleaded guilty in 2022 to US banking violations alongside his co-founders and paid a $10 million fine. He received a presidential pardon from Donald Trump in March 2025.

Delo is also a LIMS trustee, and has previously backed several causes, including neurodiversity, academic freedom and mathematical education and research. In 2025, he funded the creation of the Ben Delo Fellowship at the London Institute.

Founded in 2011 by physicist Thomas Fink, LIMS operates from the Royal Institution, in rooms once occupied by chemist Michael Faraday. The institute focuses exclusively on research, backing three-year fellowships in theoretical physics, pure mathematics and artificial intelligence. In recent years, it has supported exiled Russian and Ukrainian scientists and attracted researchers from the US.

Cointelegraph reached out to LIMS for comment, but had not received a response by publication.

Related: ​​Top UK Labour lawmakers push to ban political donations made in crypto

UK lawmakers call for temporary ban on crypto political donations

Last week, the chair of the UK’s national security committee called for an immediate temporary ban on political donations made in cryptocurrency, warning that such payments could enable foreign interference in British elections.