Recently, Grayscale has consecutively launched the Optimism Trust Fund and the Lido Trust Fund. Within its trust funds, SUI and ZEN have maintained their upward momentum even during a slight pullback. Are the trust funds launched by Grayscale indeed a collection of blue-chip tokens, and will they be profitable in the long run? This article takes a look at the 26 cryptocurrency trusts launched by Grayscale and their investment returns.
Overview of Grayscale Cryptocurrency Trusts
Grayscale is a digital asset management company established in 2013, primarily providing various cryptocurrency trust funds aimed at offering investors legal and regulated investment channels. As one of the largest digital asset management companies globally, it manages billions of dollars in assets. As of now, Grayscale has launched 26 cryptocurrency trusts.
Grayscale Trust Funds is a series of cryptocurrency investment products offered by Grayscale, allowing investors to indirectly hold cryptocurrencies such as Bitcoin and Ethereum without needing to directly purchase and manage them. Each trust fund is linked to a specific cryptocurrency asset, such as the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE). Through these trust funds, investors can buy and sell shares of cryptocurrency assets on public markets just like traditional stocks.
In addition to single-coin trust funds, Grayscale's bundled coin combination funds also have significant investment reference value. Currently, Grayscale's cryptocurrency trusts, apart from ETFs, primarily fall into three phases of product cycles.
· PRIVATE PLACEMENT: Grayscale products are first launched in a private placement format, allowing qualified investors to participate in cryptocurrency investments. The initial restriction period for stocks purchased through private placements is one year. Currently, Grayscale Sui Trust, Grayscale Lido DAO Trust, etc. fall into this phase.
· PUBLIC QUOTATION: A market form of public quotation, allowing all investors to participate in cryptocurrency investments. However, due to the lack of a continuous buyback plan, publicly traded stocks may trade at a premium or discount relative to the value of their underlying assets. Currently, MANA, GLNK, DEFG, etc. fall into this phase.
· SEC REPORTING: Grayscale products are the first to report to the SEC. The requirements for reporting to the SEC will further enhance disclosure levels, providing greater transparency for investors and subjecting the products to additional regulatory oversight. Currently, ETCG, ZCSH, HZEN, etc. fall into this phase.
It is difficult to outperform BTC in the long term.
Reports indicate that Grayscale had a significant impact on cryptocurrencies during the bull market from 2020 to 2021, significantly increasing the asset size of Bitcoin trusts and bringing in a large number of institutional investors into the crypto space. However, the performance of other cryptocurrencies launched by Grayscale during this period has been mixed in the short term and has struggled to outperform BTC in the long term.
To track the investment return rate of Grayscale funds, I recorded the token prices at the time of the trust's launch and the token prices on December 23 to create the chart above. From a timing perspective, the launch of Grayscale's crypto trust products was primarily concentrated in 2018 and 2021, during which many were at peak points or later stages of a bull market. This phenomenon may relate to the longer cycles and relatively mature markets required for Grayscale to launch its funds. This December, 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 term, only about 48% of tokens (including BTC and ETH) show positive investment returns, which is even lower than the random 50% probability of flipping a coin. Moreover, their investment return rates are far inferior to BTC, showing a long-term negative expected value.
In the short term, the tokens launched by Grayscale did indeed have glorious moments, but most of these occurred before their launch. XRP has not yet surpassed its previous high even after a strong rebound, and ZEN, after rising for three consecutive days, barely maintained an 18% investment return. Although some star tokens reached peaks after their launches, when viewed from a long-term annualized perspective, their interest rates are below 10% after a long holding period of 7 years. However, different timing in building positions has a more significant impact on investment returns. If Grayscale concept tokens are accumulated at the bottom during a bear market, almost everyone outperforms the average gains in a bull market. Observing targets that have not shown significant fluctuations at this time may yield good gains next year.
Grayscale's held tokens have different indicative roles at different periods, and in this sense, Grayscale's careful selection does indeed exist.