On the 4th of April, Grayscale Investments, the world’s largest digital currency asset manager, announced a portfolio reshuffling for its Grayscale Digital Large Cap Fund (GDLC) during its first-quarter review of 2024. This update resulted in the removal of Cardano (ADA) from the fund’s holdings.
Quarterly Rebalancing and Portfolio Adjustments
As part of its standard procedure, Grayscale conducts quarterly rebalancing for its multi-asset investment vehicles, including the GDLC, the Grayscale DeFi Fund, and the Grayscale Smart Contract Platform Ex-Ethereum Fund.
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In a press release, the firm explained that the GDLC adjustments were made “in accordance with the CoinDesk Large Cap Select Index methodology.”
This methodology dictates the fund’s composition, and in this instance, it triggered the sale of Cardano (ADA) and the reallocation of the proceeds towards existing fund components based on their weightings within the index.
Following the rebalancing, the GDLC Fund now focuses on Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP, and Avalanche (AVAX). This marks a shift from a previous iteration that included Cardano (ADA) as a significant holding, even ranking as the third-largest within the portfolio in 2021.
Grayscale’s Role in the Institutional Crypto Space
Despite this recent exclusion, Grayscale remains a dominant player in institutional crypto investment and custody services. However, the evolving regulatory landscape surrounding cryptocurrencies has prompted some industry participants to diversify their holdings beyond the traditional heavyweights, Bitcoin and Ethereum.
The Bitwise 10 Crypto Index Fund serves as an example of this diversification trend. This fund tracks an index of the top ten most valuable cryptocurrencies, offering investors exposure to ADA, albeit with a minor allocation of 1.1%.
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As regulatory frameworks become clearer, we might see similar diversification strategies adopted by other investment vehicles like the VanEck fund, potentially offering investors a broader spectrum of cryptocurrency investment.
At the time of writing, data from CoinMarketCap shows ADA is trading at $0.58, reflecting a price decrease of 8.80% in the past 7 days.
Grayscale’s GDLC Fund has undergone a strategic rebalancing, excluding Cardano (ADA) and prioritizing other crypto assets based on the CoinDesk Large Cap Select Index methodology. While this might signal a shift in Grayscale’s approach to ADA, the cryptocurrency market continues to witness diversification trends within investment funds as regulations evolve.
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