Revisiting the "Grayscale Effect" of the last bull market: 14 tokens with returns exceeding 200%, significantly influenced by market cycles

Author: Nancy, PANews

Recently, with the soaring prices of coins like SUI and ZEN, the "Grayscale Effect" has reappeared, and Grayscale's holdings have become one of the market's investment barometers. So, how do the cryptocurrencies selected by Grayscale perform in terms of investment returns? This article from PANews reviews the market performance of the 14 tokens involved in the cryptocurrency trust funds launched by Grayscale during the last bull market cycle, covering the period from March 2021 to March 2022.

Average Return Exceeds 200%, Market Cycle Impact is Significant

During the last bull market, Grayscale launched 14 cryptocurrency trust products through the over-the-counter market, DeFi fund DEFG, and GSCPxE fund, which were gradually opened over about a year. From the timeline of product launches, Grayscale began introducing related token funds at the beginning of the bull market and accelerated the frequency of launches in the mid to later stages.

In terms of investment returns, the average maximum increase of these 14 tokens after Grayscale's launch was 204.8%. 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.

Regarding the time required to generate returns, the average period for these 14 tokens to reach new highs was 84.4 days, with BAT, MANA, and LPT requiring longer periods, generally exceeding 250 days, but their return rates were relatively high; while SOL, FIL, AVAX, and DOT reached new highs in a shorter time, but their increases were relatively limited, occurring during the market adjustment period after Bitcoin's new high. This phenomenon indicates that, generally, the longer the investment duration during a bull market, the more advantageous the holding returns are, and it is also related to the timing of product launches. Previous sector uptrend cycles show that public chains are mostly the targets of the first wave of increases in a bull market, and the projects launched by Grayscale mostly achieved good increases in the early stages, leading to limited upward space later.

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 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%; and by the crypto market adjustment period in March 2022, the increase of the launched tokens was only 40.3%. This shows that Grayscale's investment returns are significantly affected by market cycle fluctuations, exhibiting clear cyclical characteristics.

From this perspective, although Grayscale's cryptocurrency trust products provided considerable returns during the bull market, their performance was significantly influenced by market volatility. Therefore, investors should fully consider the overall market trend when making investment decisions.

Participating in Multiple Explosive Token Layouts, Expanding Investment Product Range

Recently, several tokens have shown strong price performance, and Grayscale's layout may play an important role in driving market trends.

For example, XRP recently broke through multi-year highs. In September of this year, Grayscale announced the re-launch of the first U.S. XRP trust fund, which has recently been officially opened to qualified investors. It is worth noting that as early as January 2021, Grayscale removed the XRP trust and liquidated its holdings due to Ripple's legal disputes. This change 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 response to Grayscale's move.

SUI's price has also performed strongly in recent 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, including six new tokens such as SUI and TAO. At the same time, Grayscale also began its investment layout for SUI, announcing the launch of Grayscale Sui Trust in August of this year, which has recently been officially opened to qualified investors.

Another noteworthy token is ZEN, which has also seen impressive price growth recently, with an increase of about 215% in the past 30 days. After increasing its holdings in ZEN tokens, Grayscale also recently 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 these projects, Grayscale has also provided legitimacy and recognition for more crypto assets. On December 24, Grayscale announced the opening of private placements for 22 cryptocurrency trust products to qualified investors, including mainstream tokens such as AAVE, AVAX, LINK, SOL, and XRP, as well as fund products in niche sectors like DeFi and AI, allowing investors to subscribe at net asset value (NAV). The products opened include thematic funds such as the Grayscale Decentralized AI Fund and Grayscale Decentralized Finance Fund, as well as single-asset trusts for emerging protocols like Bittensor, Lido DAO, and Optimism.

Furthermore, Grayscale is also accelerating its business expansion and seeking more professionals to meet the increasingly complex market demands. Earlier this month, Grayscale announced the launch of recruitment, covering positions such as: Tax Director, Senior Manager of ETF Products, Digital Asset Trader, Portfolio Manager, Product Manager, and Engineering Director.

Although the specific impact of these initiatives on token price changes has not yet fully manifested, Grayscale's provision of more diversified and specialized investment products will further drive crypto assets toward the mainstream market.