When it comes to investing in cryptos, nobody does it better than Grayscale. Grayscale created the first fund that invests in the crypto world, a place where qualified investors can finally gain exposure to the crypto markets without needing to hold and store cryptocurrencies. The fund invests in the top 5 cryptocurrencies by market cap and is currently made up of Bitcoin, Litecoin, Ethereum, Bitcoin Cash, and XRP. Every quarter, Grayscale adjusts the weighting of the fund to take more bullish and bearish positions on certain cryptocurrencies.
The Grayscale Digital Large Cap Fund (DLC) is seen as a marker for the expected market performance in the coming quarter – so the latest weighting is huge news.
Out With XRP, In with Litecoin
The DLC fund closed 2018 with 14.7% of the portfolio invested into XRP, a sign that the fund managers presumed XRP would have a bumper start to the year. However, after performing relatively poorly, it looks as if Greyscale are slowly phasing out the cryptocurrency. In the latest weighting rebalance, XRP holdings are down to a meagre 11.9% of the total portfolio, while Litecoin has seen a nice bump up from 1.8% in December 2018 to 3.3%. The portfolio has shaved a number of Ethereum and Bitcoin Cash tokens in favor of Bitcoin – the biggest cryptocurrency.
2/ DLC is a passive, rules-based strategy that seeks to provide exposure to the large cap segment of the digital asset class (70% target coverage)
— Grayscale (@GrayscaleInvest) April 5, 2019
Bitcoin on Fire
Over the last couple of weeks, the Bitcoin bulls have been back in action, helping the price start to climb. There is no doubt that this latest market movement – led by Bitcoin, of course – has been instrumental in the decision to increase the Bitcoin weighting, and as it continues to rise investors will be licking their lips. Bitcoin is showing no signs of slowing down, so it comes as no surprise that Grayscale – and the rest of the crypto world – is piling in on BTC, helping to push it even higher.
Futures Becoming Popular Again
Just weeks after the Cboe decided to pause Bitcoin futures, the crypto market picked up steam once again. CMEGroup managed to cash in on the lack of futures available, breaking its record trading day by over 22,000 contracts. This means thousands of people around the world are betting that Bitcoin will either head to the moon or sink to the bottom of the ocean by the end of April. Futures can be a risky bet, making the DLC fund a better long-term option.
As Grayscale increases its position in Litecoin and Bitcoin by a significant amount, we could be about to witness other crypto investors following suit. If so, our predictions for Litecoin heading to $400 could come true sooner than expected.