Grayscale Investments, one of the world’s largest digital currency asset managers and a prominent player in the crypto space, recently announced the quarterly rebalancing of its investment products, including the Digital Large Cap Fund (DLC Fund), Smart Contract Platform Ex-Ethereum Fund, and DeFi Fund. This rebalancing resulted in a shift in the composition of the DLC Fund.
This comes in the wake of Coinbase’s victory in the US Court of Appeals for the Second Circuit in Manhattan, where sales of digital assets on the secondary market were declared non-securities.
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XRP Gains Foothold in Grayscale’s DLC Fund
XRP rejoined the DLC Fund in Q3 of 2023, after a prolonged absence due to uncertainty caused by the legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC).
Grayscale previously held XRP in the fund, but after the SEC accused Ripple of selling XRP as an unregistered security, Grayscale and many companies backed off the digital asset. Following XRP’s pivotal victory against the SEC, the crypto asset manager opted to reincorporate XRP into the DLC Fund during its recent rebalancing.
This move by Grayscale has generated considerable interest within the cryptocurrency community, particularly regarding its potential impact on XRP’s price.
The reintroduction of XRP into the DLC Fund signifies Grayscale’s confidence in the digital asset’s regulatory clarity, potentially influencing investor sentiment. Additionally, the substantial holdings of over 16.7 million XRP by the asset manager could contribute to increased market demand.
Grayscale’s Investment Breakdown and Objectives
The Grayscale DLC Fund aims to provide investors with exposure to leading cryptocurrencies. The recent rebalancing reflects this objective, with Bitcoin (BTC) maintaining its dominant position within the fund at 70.96%.
Ethereum (ETH) follows closely at 21.85%, highlighting the dominance of established blockchain networks. Solana (SOL) holds a notable presence at 4.52%, while Avalanche (AVAX) makes up a smaller portion at 0.95%. Notably, the rebalancing did not introduce any new assets to the fund.
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Speculation on Grayscale’s Future XRP Strategy
The return of XRP to the DLC Fund has fueled speculation regarding Grayscale’s potential launch of an XRP-specific exchange-traded fund (ETF). However, no official applications have been made.
This speculation comes from Grayscale’s recent launch of Bitcoin spot ETFs, with an Ethereum ETF reportedly under development. Given XRP’s clarified regulatory status, market participants view it as a strong contender for Grayscale’s next cryptocurrency ETF offering.
By providing a regulated investment vehicle for XRP, a Grayscale ETF could significantly increase investor access and potentially drive further mainstream adoption of the digital asset. These developments have the potential to influence XRP’s market performance.
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