Revisiting the "Grayscale Effect" from the Last Bull Market: 14 Tokens Delivered Over 200% Returns, with Market Cycles Showing Significant Impact
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Revisiting the "Grayscale Effect" from the Last Bull Market: 14 Tokens Delivered Over 200% Returns, with Market Cycles Showing Significant Impact
This article reviews the market performance of 14 tokens involved in Grayscale's cryptocurrency trust funds launched during the previous bull cycle.
Navigating Web3 tides with focused insightsBy Nancy, PANews
Recently, as prices of cryptocurrencies such as SUI and ZEN surged, the "Grayscale effect" has reemerged, making Grayscale's holdings one of the market's investment benchmarks. How have Grayscale’s carefully selected crypto assets performed in terms of return on investment? This article by PANews reviews the market performance of 14 tokens covered by Grayscale’s cryptocurrency trust funds during the previous bull cycle, from March 2021 to March 2022.
Average Return Exceeds 200%, Significantly Influenced by Market Cycles
During the last bull market, Grayscale launched 14 cryptocurrency trust products through over-the-counter markets, the DeFi Fund (DEFG), and the GSCPxE fund, rolling them out gradually over approximately one year. In terms of launch timing, Grayscale began introducing token funds early in the bull market and accelerated its deployment frequency in the mid-to-later stages.
In terms of investment returns, these 14 tokens achieved an average peak increase of 204.8% after Grayscale’s fund announcements. Notably, LPT, LDO, and BAT stood out with increases of 1497.1%, 292.6%, and 239.8% respectively. In contrast, SOL, DOT, and SNX significantly underperformed relative to the average.
Regarding the time required to generate returns, the 14 tokens took an average of 84.4 days to reach their interim highs. Tokens like BAT, MANA, and LPT required longer periods—generally over 250 days—but delivered relatively higher returns. On the other hand, SOL, FIL, AVAX, and DOT reached new highs more quickly, though their overall gains were more limited. This period coincided with a market correction following Bitcoin’s all-time high. The data suggests that, generally, longer holding periods during bull markets tend to yield better returns, but timing also plays a crucial role. Historical sector cycles show that layer-1 blockchains often lead the initial wave of bull market rallies. Since many of these projects had already appreciated significantly earlier, their upside potential was constrained later in the cycle.
However, these differences were also partly influenced by shifts in the market cycle. Specifically, tokens introduced by Grayscale in the first half of 2021, during the early bull phase, saw an average increase of 446.8%. During the mid-bull period from April to November 2021, average gains dropped to 85.4%. By March 2022, amid a broader crypto market downturn, newly launched tokens increased by only 40.3%. This clearly indicates that Grayscale’s investment returns are highly sensitive to market cycles, exhibiting strong cyclical patterns.
Overall, while Grayscale’s cryptocurrency trust products delivered substantial returns during the bull market, their performance was heavily shaped by broader market dynamics. Investors should therefore carefully consider prevailing market trends when making investment decisions.
Expanding Investment Scope by Targeting Multiple High-Growth Tokens
Recently, several tokens have shown strong price momentum, and Grayscale’s strategic moves may be playing a significant role in shaping market sentiment.
For example, XRP recently broke multi-year price highs. In September, Grayscale announced the relaunch of its U.S.-based XRP Trust and has since opened it to qualified investors. Notably, Grayscale had previously removed XRP from its offerings and liquidated its holdings in January 2021 due to Ripple’s legal dispute with the SEC. This reversal is widely interpreted as a step toward a potential XRP spot ETF. Following the announcement, XRP’s price rose steadily over the subsequent months—suggesting positive market sentiment toward Grayscale’s renewed involvement.
SUI has also demonstrated strong performance over recent months. Earlier this year, Grayscale updated its investment strategy and published a list of its top 20 tokens expected to see significant growth by the end of 2024, adding six new tokens including SUI and TAO. Grayscale also initiated investment positioning in SUI, announcing in August the launch of the Grayscale Sui Trust, which has now officially opened to accredited investors.
Another notable token is ZEN, which has seen impressive price gains recently—up approximately 215% over the past 30 days. After increasing its ZEN holdings, Grayscale recently filed an 8-K form with the SEC for the Grayscale Horizen Trust (ZEN), enabling investors to gain exposure to ZEN tokens through a securities-based vehicle.
Beyond these examples, Grayscale continues to enhance legitimacy and recognition for a broader range of digital assets. On December 24, Grayscale announced private placements for 22 cryptocurrency trust products available to qualified investors, including major tokens such as AAVE, AVAX, LINK, SOL, and XRP, as well as thematic funds focused on sectors like DeFi and AI. Investors can subscribe at net asset value (NAV). The offering includes thematic funds such as the Grayscale Decentralized AI Fund and Grayscale Decentralized Finance Fund, along with single-asset trusts for emerging protocols like Bittensor, Lido DAO, and Optimism.
In addition, Grayscale is accelerating its business expansion and actively recruiting specialized talent to meet increasingly complex market demands. Earlier this month, Grayscale announced job openings for roles including Tax Director, Senior ETF Product Manager, Digital Asset Trader, Portfolio Manager, Product Manager, and Engineering Lead.
While the precise impact of these initiatives on token prices remains to be fully realized, Grayscale’s efforts to offer more diversified and professional investment products are poised to further drive crypto assets into the mainstream financial landscape.
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