Grayscale Funds Drops ADA and ATOM in Quarterly Rebalancing

NAIROBI (Coinchapter.com) – Grayscale Investments, LLC, a leading digital currency asset manager, announced significant changes to its fund components after its first quarterly rebalancing of 2024. The Grayscale fund has decided to drop Cardano (ADA) and Cosmos (ATOM) from its Digital Large Cap Fund and Smart Contract Platform Ex-Ethereum Fund, respectively. This move, detailed in a press release and social media updates on April 4, 2024, reflects the company’s strategic adjustment to its asset weightings and investment focus.

Following the announcement, the Grayscale fund has been under the investors’ microscope, gauging the impact of ADA and ATOM’s removal. With assets under management (AUM) totaling over $22 billion, the fund’s decisions significantly influence market perceptions and investment strategies. The total bitcoin held in trust underscores Grayscale’s robust position in the digital asset space, hosting 326,858.6701 bitcoins. Despite the removal of ADA and ATOM, the fund maintains a diversified portfolio, including leading cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL).

Grayscale Funds Rebalancing Rationale

According to Grayscale’s post on X, the proceeds generated from selling the ADA and ATOM tokens were used to bolster the existing components within the respective funds. This move is part of the asset manager’s routine quarterly rebalancing process, designed to ensure that the funds maintain their targeted asset allocations.

The Grayscale Digital Large Cap Fund now boasts a composition of 70.96% Bitcoin, 16.80% Ethereum, 5.78% Solana, 4.50% XRP, and 1.96% Avalanche. Meanwhile, the Grayscale Smart Contract Platform Ex-Ethereum Fund’s portfolio now comprises 58.41% Solana, 14.56% Cardano, 12.25% Avalanche, 8.53% Polkadot, and 6.25% Polygon.

Underperforming Tokens

The decision to remove ADA and ATOM from Grayscale’s funds can be attributed to the lackluster performance of these cryptocurrencies in the year-to-date (YTD) period. Cardano’s ADA token has fallen 8.1% YTD, while Cosmos’ ATOM has dipped over 3.3% during the same timeframe.

In contrast, industry heavyweights like Bitcoin and Ethereum have experienced remarkable rallies, with Bitcoin up 59% and Ethereum up over 40% since the beginning of the year.

The removal of ADA and ATOM contrasts with Grayscale’s recent launch of the Grayscale Dynamic Income Fund. This new fund prioritizes cryptocurrencies, offering staking rewards. However, it caters exclusively to high-net-worth individuals. To qualify, investors must have at least $1.1 million in assets under management or a net worth exceeding $2.2 million.