Though crypto is said to be decentralized, Grayscale’s recognition of crypto assets certainly help define the trajectories of coin or token prices. However, more than just new product additions, asset removals are also key in understanding what institutional investors want – or don’t want.
No gray area here
In a press release, Grayscale Investments announced that it is changing the portfolio composition of the Digital Large Cap Fund. Additionally, he sold some assets and used the proceeds to buy Avalanche [AVAX] and polka dots [DOT]. AVAX and DOT each represented less than 2% of the fund.
In a press release, Grayscale reported,
“As a result of the rebalancing, SushiSwap (SUSHI) and Synthetix (SNX) have been removed from the CoinDesk DeFi Index and the DeFi Fund. No new tokens were added to the DeFi Fund.”
At press time, SushiSwap [SUSHI] – market cap 141 – was trading at $3.63 after rising 0.81% over the past day, but plunging 17.37% over the past week.
Meanwhile, Synthetix [SNX] – market cap rank 116 – was changing hands at $5.72, after rising by 1.52% in the last 24 hours, but diving by 20.67% in the past week.
Some DeFi users have speculated that one of the reasons Grayscale is removing SUSHI and SNX may be the company’s attempt to focus more on the top 100 blockchains and coins/assets rather than DeFi tokens. . However, at press time, Uniswap [UNI] represented 42.34% of the DeFi fund. This was followed by the curve [CRV]Aave [AAVE]amp [AMP]ManufacturerDAO [MKR]Compound [COMP]and Yearn Finance [YFI].
The snowball effect
So let’s take a look at Avalanche [AVAX], which joined the Digital Large Cap Fund. With a market cap ranking of 10, AVAX was trading at $88.55, after a 4.80% rally in the past 24 hours. However, it lost 5.82% of its value in the past week as the market turned red.
That being said, data from Santiment shows us that AVAX transaction volumes have been on the rise since March 28th. Despite a decline that accompanied the weekly price decline, AVAX volumes are significantly higher than they were in late 2021 and early 2022, even when the price was higher. This can be considered a sign of steady growth.
You can’t sit with us
What assets will Grayscale be selling off next? It’s impossible to guess, but let’s take a look at assets’ total-value-locked [TVL] rankings. At press time, Defi Llama showed that – apart from Amp and Yearn Finance – all assets from their DeFi Fund were part of the top 10 list.
Is Grayscale only interested in top performers or is there enough growth potential to stay in the fund? We’ll have to keep watching to be sure.