ZEN bucked the trend and rose for 3 days in a row and doubled. Is the "grayscale effect" showing up again?

Author: shaofaye123, Foresight News

Recently, Grayscale launched Optimism Trust Fund and Lido Trust Fund one after another. Among its trust funds, SUI and ZEN also continued to rise despite a correction. Is the trust fund launched by Grayscale a collection of blue-chip tokens, and will it be profitable in the long run? This article takes you through the 26 crypto trusts currently launched by Grayscale and their investment returns.

Grayscale Crypto Trust at a Glance

Grayscale is a digital asset management company founded in 2013. It mainly provides a variety of crypto-asset trust funds and aims to provide investors with legal and regulated investment channels. As one of the world's largest crypto asset managers, it manages billions of dollars in assets. So far, Grayscale has launched 26 crypto trusts.

Grayscale Trust Funds are a series of crypto asset investment products provided by Grayscale. These products allow investors to indirectly hold cryptocurrencies such as Bitcoin and Ethereum without directly purchasing and managing cryptocurrencies. Each trust is tied to a specific crypto asset, such as Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE), among others. Through these trusts, investors can buy and sell shares of crypto assets on the open market just like investing in traditional stocks.

In addition to single-currency trust funds, the basket-of-currency portfolio funds launched by Grayscale also have strong investment reference significance. At present, the product cycle of Grayscale's crypto trusts, except for ETFs, is mainly divided into three stages.

• PRIVATE PLACEMENT: Grayscale products will first be launched in the form of private placements, allowing qualified investors to participate in cryptocurrency investments. Shares purchased in a private placement have an initial restriction period of one year. Currently Grayscale Sui Trust, Grayscale Lido DAO Trust, etc. all belong to this stage.
• PUBLIC QUOTATION: A market form of public quotation that allows all investors to participate in cryptocurrency investment. But in the absence of an ongoing buyback program, publicly traded stocks may trade at a premium or discount to the value of their underlying assets. Currently MANA, GLNK, DEFG, etc. all belong to this stage.
• SEC REPORTING: Grayscale Products is the first company to report to the SEC. The requirement to report to the SEC will further increase disclosure levels, provide greater transparency to investors and subject products to additional regulatory oversight. Currently, ETCG, ZCSH, HZEN, etc. all belong to this stage.

It’s hard to win BTC in the long run

According to the report, Grayscale had a greater impact on cryptocurrencies during the bull market from 2020 to 2021. At that time, Grayscale significantly increased the asset size of the Bitcoin Trust and introduced a large number of institutional investors to the crypto field. Other cryptographic tokens launched by Grayscale during this period have had mixed performance in the short term, and it is difficult to outperform BTC in the long term.

In order to track the investment return rate of Grayscale Fund, the author recorded the token price when Grayscale Fund launched the trust and the token price on December 23, and made the above chart. From a time perspective, Grayscale’s launch of encrypted trust products was previously concentrated in 2018 and 2021, and these were mostly the periodic highs or the second half of the bull market. This phenomenon may be related to the fact that it takes a long time for Grayscale to launch funds and a relatively mature market. In December this year, Grayscale began to launch trust funds again. Will it be able to break the cycle of short-term highs this time?

In terms of investment return, in the long term, only about 48% of the tokens (including BTC and ETH) show positive investment returns, which is lower than the 50% probability of a random coin toss. Moreover, its return on investment is far less than that of BTC, showing negative EV in the long term.

In the short term, the tokens launched by Grayscale did have their shining moments, but most of them occurred before their launch. Even after a strong rebound, XRP has not yet risen above its previous high. After three consecutive days of gains, ZEN can only maintain an 18% return on investment. Although some star tokens have reached highs after their launch, from a long-term annualized perspective, after a long 7-year holding period, their interest rates are even lower than 10%. However, different timing of opening positions has a more important impact on investment returns. If the Grayscale Concept Coin opens a position to buy the bottom in a bear market, almost everyone will outperform the average increase in the bull market. At this time, observing the targets that have not yet seen any obvious changes may usher in good gains next year.

Grayscale’s holding tokens have different indicating functions at different cycle times. In this sense, Grayscale’s strict selection does exist.