Original author: shaofaye 123, Foresight News

Recently, Grayscale has consecutively launched the Optimism Trust Fund and the Lido Trust Fund. Among its trust funds, SUI and ZEN continue to rise despite a temporary pullback. Are Grayscale's trust funds really a collection of blue-chip tokens, and will they be profitable in the long run? This article provides an overview of the 26 crypto trusts currently launched by Grayscale and their investment returns.

Overview of Grayscale Crypto Trusts

Grayscale is a digital asset management company established in 2013, primarily offering a variety of cryptocurrency trust funds aimed at providing investors with legitimate and regulated investment channels. As one of the largest cryptocurrency asset management companies in the world, it manages billions of dollars in assets. To date, Grayscale has launched 26 crypto trusts.

Grayscale Trust Funds are a series of cryptocurrency investment products offered by Grayscale that allow investors to indirectly hold cryptocurrencies such as Bitcoin and Ethereum without directly buying and managing them. Each trust fund is linked to a specific cryptocurrency, such as the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE). Through these trust funds, investors can buy and sell shares of crypto assets on the public market, just like traditional stocks.

In addition to single-asset trust funds, the bundled asset combination funds launched by Grayscale also have strong investment reference significance. Currently, Grayscale's crypto trusts, apart from ETFs, are mainly divided into three phases.

  • PRIVATE PLACEMENT: Grayscale products are first launched in a private placement format, allowing qualified investors to participate in cryptocurrency investments. The initial lock-up period for shares purchased in private placements is one year. Currently, Grayscale Sui Trust, Grayscale Lido DAO Trust, etc., are in this phase.

  • PUBLIC QUOTATION: A market form of public quotation that allows all investors to participate in cryptocurrency investments. However, due to the lack of a continuous repurchase plan, publicly traded shares may trade at a premium or discount to their underlying asset value. Currently, MANA, GLNK, DEFG, etc., are in this phase.

  • SEC REPORTING: Grayscale products are the first to report to the SEC. Reporting to the SEC will further increase the level of disclosure, provide greater transparency for investors, and subject the products to additional regulatory oversight. Currently, ETCG, ZCSH, HZEN, etc., are in this phase.

Long-term performance is hard to beat BTC

According to reports, Grayscale had a significant impact on cryptocurrencies during the bull market from 2020 to 2021, during which Grayscale significantly increased the asset scale of its Bitcoin trust, bringing in a large number of institutional investors into the crypto space. However, the other crypto tokens launched by Grayscale during this period performed inconsistently in the short term and struggled to outperform BTC in the long term.

To track the investment returns of Grayscale funds, the author recorded the token prices at the time of the trust launch and the token prices on December 23, creating the chart above. In terms of timing, Grayscale's launch of crypto trust products was primarily concentrated in 2018 and 2021, which coincided with peak phases or the later stages of bull markets. This phenomenon may be related to the lengthy cycle and relatively mature market required for Grayscale to launch funds. In December this year, Grayscale began to concentrate on launching trust funds again; will this break the cycle of short-term peaks?

In terms of investment returns, in the long term, only about 48% of tokens (including BTC and ETH) show positive investment returns, which is even lower than the 50% probability of flipping a coin. Moreover, their investment return rates fall far short of BTC, presenting a long-term negative expected value.

In the short term, the tokens launched by Grayscale did indeed have glorious moments, but most occurred before their launch. Even if XRP experienced a strong rebound, it has not broken its previous high, and after three consecutive days of gains, ZEN barely maintains an 18% investment return. Although some star tokens reached peaks after their launch, when viewed from a long-term annualized perspective, their rates of return are under 10% after a long 7-year holding period. However, different timing of positioning has a more significant impact on investment returns; if Grayscale concept coins are bought at the bottom during a bear market, almost everyone will outperform the average gains of a bull market. Observing assets that have not shown significant movements at this time may lead to good gains next year.

Grayscale's held tokens have different indicative roles at different cycle moments, and in this sense, Grayscale's strict selection does exist.