ZEN breaks through 30 USDT; what is the return on Grayscale's other holdings?

Written by: shaofaye123, Foresight News

Recently, Grayscale has launched the Optimism Trust Fund and the Lido Trust Fund in succession. Among its trust funds, SUI and ZEN have still shown an upward trend amid a brief correction. Are the trust funds launched by Grayscale a collection of blue-chip tokens, and will they be profitable in the long run? This article provides 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 various cryptocurrency trust funds aimed at offering investors a legitimate and regulated investment channel. As one of the largest cryptocurrency asset management companies in the world, it manages tens of billions of dollars in assets. As of now, Grayscale has launched 26 cryptocurrency trusts.

Grayscale Trust Funds are a series of cryptocurrency investment products offered by Grayscale, allowing investors to indirectly hold cryptocurrencies such as Bitcoin and Ethereum without directly purchasing and managing them. Each trust fund is linked to a specific cryptocurrency asset, such as Grayscale Bitcoin Trust (GBTC) and 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, the bundled currency combination funds launched by Grayscale also have strong investment reference significance. Currently, Grayscale's cryptocurrency trusts, aside from ETFs, are mainly divided into three stages.

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

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

  • SEC REPORTING: Grayscale products are the first to report to the SEC. The requirements for reporting 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's hard to outperform BTC in the long run.

Reports indicate that Grayscale had a significant impact on cryptocurrency during the bull market from 2020 to 2021, during which Grayscale greatly increased the asset scale of its Bitcoin trust and introduced a large number of institutional investors into the cryptocurrency field. However, other cryptocurrencies launched by Grayscale during this period performed variably in the short term and struggled to outperform BTC in the long term.

To track Grayscale fund investment return rates, I recorded the token prices at the time Grayscale launched the trusts and the token prices on December 23, creating the above chart. From a timeline perspective, Grayscale's launch of cryptocurrency trust products was concentrated before 2018 and 2021, which were mostly peak or later stages of a bull market. This phenomenon may be related to the relatively long cycle and relatively mature market required for Grayscale to launch funds. This December, Grayscale began to focus on launching trust funds again; whether this can break the cycle of short-term peaks remains to be seen.

In terms of investment returns, in the long run, tokens that present positive investment returns (including BTC, ETH) account for only about 48%, which is lower than the random 50% probability of a coin toss. Moreover, their investment return rates are far below BTC, showing a long-term negative EV.

In the short term, the tokens launched by Grayscale indeed had brilliant moments, but most occurred before their launch. XRP, even after a strong rebound, has yet to break its previous high, while ZEN has only managed to maintain an 18% investment return after three consecutive days of gains. While some star tokens have reached peaks after their launch, from a long-term annualized perspective, after holding for a long 7 years, their interest rates are even below 10%. However, different entry timing has a more significant impact on investment returns; if Grayscale concept tokens are accumulated at the bottom during a bear market, almost everyone can outperform the average gains in a bull market. Observing targets that have not shown obvious movements at this time may lead to good price increases next year.

Grayscale's holding tokens have different indicative roles at different periods; in this sense, Grayscale's selective investment does exist.