Author: Nancy, PANews
Recently, with the surge in prices of tokens like SUI and ZEN, the 'Grayscale effect' has reappeared, and Grayscale's holdings have also become one of the market's investment indicators. So, how do the cryptocurrencies selected by Grayscale perform in terms of return on investment? This article by PANews reviews the market performance of the 14 tokens involved in Grayscale's cryptocurrency trust funds launched during the last bull market cycle, covering the period from March 2021 to March 2022.
Average return exceeds 200%, significant impact from market cycles
During the last bull market, Grayscale launched 14 cryptocurrency trust products through over-the-counter markets, DeFi fund DEFG, and GSCPxE fund, which were gradually opened over about a year. From the launch time of the products, Grayscale started introducing related token funds at the beginning of the bull market and accelerated its layout frequency in the mid to late stages.
In terms of return on investment, these 14 tokens had an average maximum increase of 204.8% after Grayscale's launch. Among them, LPT, LDO, and BAT had particularly outstanding increases of 1497.1%, 292.6%, and 239.8%, respectively. In contrast, the increases of SOL, DOT, and SNX were far below the average level.
In terms of the time length required to generate investment returns, the average cycle for the 14 tokens to reach a new high is 84.4 days, during which BAT, MANA, and LPT required a longer cycle, generally exceeding 250 days, but the return rates were also relatively high; while SOL, FIL, AVAX, and DOT reached new highs in a shorter time, but their increases were relatively limited, as this period was during the market adjustment period after Bitcoin's new high. This phenomenon indicates that, generally, the longer the investment time during a bull market, the more advantageous the holding return, and it is also related to the product launch time. Previous sector rising cycles showed that public chains were mostly the targets of the first wave of bull market rise, and most of the projects launched by Grayscale achieved good increases in the early stage, resulting in limited upward space in the later stage.
However, this difference is also influenced to some extent by changes in market cycles. Specifically, the average increase of token funds launched by Grayscale during the early stage of the bull market in the first half of 2021 was 446.8%; during the mid-bull market from April to November 2021, the increase dropped to 85.4%; by the crypto market adjustment period in March 2022, the increase of the launched tokens was only 40.3%. It can be seen that Grayscale's return on investment is greatly affected by market cycle fluctuations, showing a clear cyclical characteristic.
From this perspective, although Grayscale's cryptocurrency trust products provided considerable returns during the bull market, their performance is significantly affected by market volatility. Therefore, investors should fully consider the overall market trend when making investment decisions.
Participate in multiple explosive token layouts to expand the range of investment products
Recently, multiple tokens have shown strong price performance, and Grayscale's layout may play an important role in driving market trends.
For example, XRP, which recently broke through multi-year highs. In September this year, Grayscale announced the re-launch of the first U.S. XRP Trust and has recently formally opened it to qualified investors. It is worth noting that as early as January 2021, Grayscale removed the XRP trust and liquidated its holdings due to the Ripple legal dispute. This shift has been interpreted by the outside world as paving the way for a potential XRP spot ETF, and XRP's price has continued to rise in the following months, possibly indicating a positive market reaction to Grayscale's move.
The price of SUI has also performed very strongly in the past few months. A few months ago, Grayscale updated its investment strategy and announced the top 20 tokens expected to rise significantly by the end of 2024, which included 6 new tokens such as SUI and TAO. At the same time, Grayscale also started its investment layout for SUI, announcing the launch of Grayscale Sui Trust in August this year, which has recently been officially opened to qualified investors.
Another noteworthy token is ZEN, which has also seen a strong price increase recently, with an increase of about 215% over the past 30 days. After recently increasing its holdings of ZEN tokens, Grayscale also announced the submission of the Grayscale Horizen Trust (ZEN) 8-K form to the SEC, allowing investors to gain exposure to ZEN tokens through securities.
In addition to the above projects, Grayscale has also provided legitimacy and recognition for more cryptocurrency assets. On December 24, Grayscale announced the opening of 22 cryptocurrency trust products for private placement to qualified investors, including mainstream tokens such as AAVE, AVAX, LINK, SOL, XRP, as well as fund products in niche sectors such as DeFi and AI. Investors can subscribe based on the net asset value (NAV). The products opened this time include themed funds such as Grayscale Decentralized AI Fund and Grayscale Decentralized Finance Fund, as well as single asset trusts of emerging protocols such as Bittensor, Lido DAO, and Optimism.
In addition, Grayscale is further accelerating its business expansion and seeking more professional talent to meet the increasingly complex market demands. At the beginning of this month, Grayscale announced the launch of recruitment, involving positions such as: Tax Director, Senior ETF Product Manager, Digital Asset Trader, Portfolio Manager, Product Manager, and Engineering Director.
Although the specific impact of these measures on token price changes has not yet fully manifested, Grayscale is further promoting cryptocurrency assets towards the mainstream market by providing investors with more diversified and specialized investment products.
Related Reading: Review of 21 Grayscale Cryptocurrency Trust Funds: Some increased by 10 times, while others continued to bear, making it easy to miss the last train of the bull market.
