Big Gray Fund Positions, MATIC Falls Out of Favor, AVAX and XRP Become Popular, What Should Investors Do?

Introduction:

Grayscale has made a quarterly update to the Grayscale Digital Large Cap Fund (GDLC) component weights, adding AVAX and XRP and removing MATIC, which, as of January 4, 2024, consists of BTC, ETH, ADA, SOL, AVAX, and XRP.What does this adjustment mean, and how does it affect future confidence in MATIC’s performance? ?

Grayscale is a U.S.-based digital currency investment firm that provides institutional investors with an avenue to legally buy and sell cryptocurrencies. Grayscale has a variety of trust fund products, the most notable of which is the Grayscale Bitcoin Trust (GBTC), which is currently the largest Bitcoin trust on the market, holding over 600,000 Bitcoins. Other trust fund products from Grayscale include cryptocurrencies such as Ether, Ether Classic, Litecoin, Bitcoin Cash, sol, STR, MANA, ZEC, ZEN, LINK, LPT, BAT, FIL, and more.

First, we need to understand the grayscale adjustment criteria. According to the official description of Grayscale, the objective of the Grayscale Digital Large Cap Fund is to track the CoinDesk Market Index, an index reflecting the cryptocurrency market, which is maintained and updated by CoinDesk’s research department.The composition of the CoinDesk Market Index is based on the evaluation of the following four dimensions: liquidity, market capitalization, technological innovation, and community participation. Each quarter, CoinDesk adjusts the composition of the index based on changes in these dimensions. ETC Miner

Therefore, GrayScale’s adjustments are based on changes in the CoinDesk Market Index, not on GrayScale’s own subjective judgment. The purpose of Grayscale’s adjustments is to make its funds better reflect the reality of the cryptocurrency market and to provide investors with more choices and opportunities.

So why did CoinDesk Market Index remove MATIC and add AVAX and XRP? This may have something to do with the development path and market performance of these three programs in the past. First of all, MATIC is the native token of the Polygon network, which is an Ether-based Layer2 scaling solution. In recent years, MATIC’s price performance has been strong, and at one point it was among the top 10 by market capitalization. However, as Ether’s scaling solution has progressed, Polygon’s dominance has waned.

CoinDesk Market Index (CMI) | Source: CoinDesk

Not only that, but there are other factors that may have influenced the adjustment of the CoinDesk Market Index. For example, MATIC is an Ether-based Layer2 scaling solution that relies heavily on Ether’s security and compatibility rather than its own innovation and independence. AVAX and XRP, on the other hand, are projects with their own underlying blockchains and consensus mechanisms, which have more autonomy and creativity. In addition, MATIC may also have less liquidity and community involvement than AVAX and XRP, which could also affect its ranking in the CoinDesk Market Index.

In summary, Grayscale’s adjustment is based on changes in the CoinDesk Market Index, not on Grayscale’s own preferences or forecasts. This adjustment reflects the dynamics and diversity of the cryptocurrency market and provides investors with more choices and opportunities. This adjustment does not mean that Grayscale has lost confidence in the performance of MATIC, nor does it mean that Grayscale has overly high expectations for the performance of AVAX and XRP. Grayscale is just following the market trends and changes, not guiding or interfering with the development of the market.  Antminer 

For MATIC holders and supporters, the adjustment of grayscale may bring some psychological blow, and may also have some negative impact on the price of MATIC. However, it doesn’t mean that the value and prospect of MATIC disappears, MATIC is still a project with strong technology and ecology, which provides an effective scaling solution for Ether and low-cost and high-efficiency services for users and developers, and MATIC still has a wide range of application scenarios and potentials, and as long as it can continue to innovate and optimize, it will be able to win the market’s recognition and support. MATIC still has a wide range of application scenarios and potential, as long as it can continue to innovate and optimize, it will be able to win market recognition and support.

For AVAX and XRP holders and supporters, the grayscale adjustment may bring some psychological encouragement, and may also have a certain positive impact on the price of AVAX and XRP. However, it does not mean that the value and prospect of AVAX and XRP are confirmed. AVAX and XRP are still facing fierce competition and challenges, and they need to continuously improve their technology and ecology, as well as to cope with the risks and changes in the market. AVAX and XRP still need to use their own strengths and achievements to prove their own value and advantages, in order to gain the trust and support of the market.

In conclusion, the gray scale adjustment is a market reaction, not a market decision. The grayscale adjustment does not represent an absolute evaluation or prediction of any project, but only represents a relative ranking or trend at a point in time. The grayscale adjustment does not affect the nature and potential of any project, but only affects the psychology and behavior of some investors. The grayscale adjustment does not determine the future or fate of any project, but only determines the flow and allocation of some funds. The grayscale adjustment is only a reference, not a standard. Gray scale adjustment is only a beginning, not an end.