Summary

  • Grayscale said the maturation of the crypto market is increasing opportunities for differentiated returns through sector and asset selection beyond Bitcoin.
  • The report said lower correlations across crypto sectors have increased the importance of individual asset selection, and that six of the top 10 non-stablecoin assets by market capitalization posted the best quarterly returns at least once over the past two years.
  • Grayscale said it uses an earnings-based approach to token valuation and that even a small allocation to Bitcoin and Ethereum (ETH) can have a meaningful impact on overall portfolio performance.

Forecast Trend Report by Period

Grayscale, the digital-asset asset manager, said the maturing crypto market is widening differentiated investment opportunities beyond Bitcoin.

Bitcoin.com reported on November 13 that Grayscale Head of Research Zach Pandl and Research Associate Charlie Perkins wrote in a recent report that as the crypto market matures, investors have more opportunities to pursue differentiated returns through sector and asset selection rather than relying solely on Bitcoin exposure.

The report said lower correlations across crypto sectors are increasing the importance of selecting individual assets. Using Grayscale's proprietary FTSE Grayscale Crypto Sectors index, the firm found that over the past three years, Bitcoin accounted for only about half of the return differences across sectors. Among the 10 largest non-stablecoin assets by market capitalization, six ranked first in quarterly returns at least once over the past two years. Bitcoin did not rank first in any quarter.

Grayscale said it applies an earnings-based approach to token valuation. The framework takes into account protocol revenue such as transaction fees and lending income, operating costs, token buybacks, staking rewards, and increases in circulating supply from new issuance and token unlocks.

Bitcoin's annualized realized volatility had fallen to the mid-40% range as of October 31, down from triple-digit levels in earlier cycles. Grayscale added that lower volatility does not mean price risk has disappeared, and that the pattern of sharp rallies and steep declines remains intact. Citing analysis from Schwab, the firm said even a small allocation to Bitcoin or Ethereum (ETH) can have a meaningful effect on overall portfolio performance.

Doohyun Hwang