Recently, Grayscale launched the Optimism Trust Fund and the Lido Trust Fund in succession. Among its trust funds, SUI and ZEN also continue to rise despite a slight pullback. Are the trust funds launched by Grayscale a collection of blue-chip tokens, and will they be profitable in the long run? This article will give you an overview of the 26 cryptocurrency trusts currently launched by Grayscale and their investment returns.
Overview of Grayscale Cryptocurrency Trusts
Grayscale is a digital asset management company founded in 2013, primarily providing a variety of cryptocurrency trust funds aimed at offering investors 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 cryptocurrency trusts.
Grayscale Trust Funds are a series of cryptocurrency investment products provided by Grayscale, allowing investors to indirectly hold cryptocurrencies like Bitcoin and Ethereum without directly purchasing and managing them. Each trust fund is linked to a specific cryptocurrency asset, such as the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE). Through these trust funds, investors can buy and sell shares of cryptocurrency assets on the public market just like investing in traditional stocks.
In addition to single-coin trust funds, Grayscale's comprehensive coin combination funds also have strong investment reference significance. Currently, Grayscale's cryptocurrency trusts, aside from ETFs, are mainly divided into three phases based on their product cycles.
· PRIVATE PLACEMENT: Grayscale products are first launched in private placement form, 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 and Grayscale Lido DAO Trust, among others, belong to this stage.
· PUBLIC QUOTATION: The public quotation market form allows all investors to participate in this cryptocurrency investment. However, due to the lack of a continuous buyback plan, publicly traded stocks may be traded at a premium or discount to the value of their underlying assets. Currently, MANA, GLNK, DEFG, etc. belong to this stage.
· SEC REPORTING: Grayscale's products are the first to report to the SEC. The requirement to report to the SEC will further enhance the level of disclosure, provide greater transparency for investors, and subject the products to additional regulatory oversight. Currently, ETCG, ZCSH, HZEN, etc. belong to this stage.
It is difficult to outperform BTC in the long run.
According to reports, Grayscale had a significant impact on cryptocurrencies during the bull market from 2020 to 2021, during which Grayscale greatly increased the asset scale of its Bitcoin trust, bringing a large number of institutional investors into the cryptocurrency sector. The other cryptocurrency tokens launched by Grayscale during this period had mixed short-term performance 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. From a temporal perspective, the launch of Grayscale's cryptocurrency trust products mainly concentrated in 2018 and 2021, which were often peak points or later stages of bull markets. This phenomenon may be related to the relatively lengthy cycle and mature market required for launching Grayscale funds. In December of this year, Grayscale began to focus on launching trust funds again; will this break the cycle of short-term peaks?
In terms of investment returns, in the long run, only about 48% of tokens (including BTC, ETH) show positive investment returns, which is even lower than the 50% probability of flipping a coin randomly. Moreover, their investment returns are far inferior to BTC, showing a long-term negative EV.
In the short term, the tokens launched by Grayscale have indeed had glorious moments, but most occurred before their launch. XRP, even after experiencing a strong rebound, has not yet broken its previous high, and ZEN, after three consecutive days of gains, barely maintains an 18% investment return. Although some star tokens reach peaks after their launch, when viewed from a long-term annualized perspective, after holding for a long 7 years, their interest rates are even lower than 10%. However, different timing of entry has a more significant impact on investment returns; if Grayscale concept tokens are built during a bear market, almost all participants outperform the average gains during a bull market. Observing targets that have not shown obvious movements at this time may yield good gains next year.
The token holdings of Grayscale have different indicative roles at different periods, and in this sense, Grayscale's selective choices do exist.