Original author: shaofaye123, Foresight News

Reprinted: Luke, Mars Finance

Recently, Grayscale launched the Optimism Trust Fund and the Lido Trust Fund in succession. The SUI and ZEN in its trust funds also maintained their upward momentum despite a brief pullback. Are Grayscale's trust funds truly a collection of blue-chip tokens, and will they be profitable in the long term? This article gives you an overview of the 26 cryptocurrency trusts currently launched by Grayscale and their investment returns.

Grayscale Encrypted Trust Overview

Grayscale is a digital asset management company founded 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 globally, 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 that allow investors to indirectly hold cryptocurrencies like Bitcoin and Ethereum without having to directly purchase and manage 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 open market just like traditional stocks.

In addition to single-coin trust funds, the diversified funds launched by Grayscale also have significant investment reference value. Currently, the cryptocurrency trusts under Grayscale, excluding 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 investment. The initial lock-up period for stocks purchased in private placements is one year. Currently, Grayscale Sui Trust, Grayscale Lido DAO Trust, and others belong to this phase.

  • PUBLIC QUOTATION: A market form with public quotations allows all investors to participate in cryptocurrency investment. However, due to the lack of a continuous repurchase plan, publicly traded stocks may trade at a premium or discount to their underlying asset value. Currently, MANA, GLNK, DEFG, and others belong to 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, provide greater transparency for investors, and subject products to additional regulatory oversight. Currently, ETCG, ZCSH, HZEN, and others belong to this phase.

In the long run, it is difficult to outperform BTC

Reports indicate that Grayscale had a significant impact on cryptocurrency during the bull market from 2020 to 2021, during which Grayscale substantially increased the asset scale of its Bitcoin trust, bringing in a large number of institutional investors to the cryptocurrency space. However, the performance of other cryptocurrency tokens launched by Grayscale during this period varied in the short term and struggled to outperform BTC in the long run.

To track the investment return rate of Grayscale funds, the author recorded the token prices when Grayscale launched its trusts and the token prices on December 23, creating the above charts. From a temporal perspective, the launch of Grayscale's cryptocurrency trust products was primarily concentrated in 2018 and 2021, which were often points of high market phases or latter stages of bull markets. This phenomenon may be related to the relatively long period and relatively mature market required for Grayscale to launch funds. This December, Grayscale has once again begun to concentrate on launching trust funds; will this time break the cycle of short-term peaks?

In terms of investment returns, in the long run, only about 48% of tokens (including BTC and ETH) show positive investment returns, which is lower than the 50% probability of flipping a coin randomly. Moreover, their investment return rates are far inferior to BTC, exhibiting a long-term negative EV.

In the short term, the tokens launched by Grayscale did have glorious moments, but most occurred before their launch. Even with a strong rebound, XRP has not yet broken its previous high, and after a three-day rise, ZEN barely maintains an 18% investment return. While some star tokens hit peaks after their launch, their annualized returns over a long-term holding period of 7 years are below 10%. However, different trading timing has a more critical impact on investment returns; if Grayscale concept tokens are acquired at the bottom during a bear market, almost all participants outperform the average gain during a bull market. Observing targets that have not yet shown significant movements may lead to good gains next year.

Grayscale's held tokens serve different indicative roles at various cyclical moments; from this perspective, Grayscale's selective criteria indeed exist.