Grayscale Currencies Crypto Sector Summary

Research Team
Last Update 11/03/2023

Examples provided for illustrative purposes. Allocations are subject to change.  

Investors can think of the Grayscale Currencies Crypto Sector similarly to how they might think of traditional currencies—with some critical distinctions. For many investors, a currency is typically defined as a: (i) store of value, (ii) medium of exchange, and (iii) unit of account. The value of a traditional currency reflects its perceived worth among users as well as aggregate demand in light of local, societal, and global macroeconomic risks. The same holds true with currencies in crypto.

There is, however, a key difference: cryptocurrencies are not issued or controlled by a central government but are instead programmatically generated. In the traditional sense of a currency, a central bank controls monetary policy and can decide to increase monetary supply. Notably, we experienced this when the Federal Reserve sought to counteract the economic effects of COVID between 2020 and 2021 to the tune of $3 trillion in quantitative easing[1]. Central banks can also decide to raise or lower interest rates based on factors such as inflation and economic growth. In crypto, by contrast, supply and inflation are predetermined in the code; they can’t be changed.

In this way, open-sourced and decentralized currencies in crypto are “trustless”; instead of needing a centralized authority or intermediary, network users need only trust the underlying code.

Bitcoin, the first and largest asset in the crypto industry, accounts for a disproportionate amount of the Grayscale Currencies Crypto Sector. Bitcoin operates as a global and decentralized network, which means it is beyond the direct control or censorship of any specific government or institution. Because it possesses a transparent and hard-capped supply, Bitcoin may serve as a safe haven for asset value in instances of monetary instability. This makes Bitcoin a particularly attractive alternative for individuals in countries like Argentina and Venezuela, where annual currency inflation rates can exceed 100%[2].

Though currently Bitcoin represents the largest asset in this sector, the Grayscale Currencies Crypto Sector includes many others. Beyond Bitcoin, XRP is the second largest asset (Figure 2). Designed as an alternative to SWIFT, XRP aims to offer fast cross-border payments at lower transaction costs[3] than competitors. Both of these assets represent General Purpose currencies, or tokens with broad application as a monetary instrument. However, this sector also includes Privacy Preserving currencies such as Monero and Zcash, which often allow for higher levels of anonymity and confidentiality (eg. stealth addresses and confidential transactions) in comparison to other crypto assets. These privacy preserving assets may be attractive in cases where sensitive transaction information is involved and can be protected from surveillance or censorship.

Examples provided for illustrative purposes only.


[1] Depledge and Statista

[2] New York Times

[3] Coinpedia and

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Investors are not to construe this content as legal, tax or investment advice, and should consult their own advisors concerning an investment in digital assets. The price and value of assets referred to in this content and the income from them may fluctuate. Past performance is not indicative of the future performance of any assets referred to herein. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments.

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There is no guarantee that the market conditions during the past period will be present in the future. Rather, it is most likely that the future market conditions will differ significantly from those of this past period, which could have a materially adverse impact on future returns. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. We selected the timeframe for our analysis because we believe it broadly constitutes the most complete historical dataset for the digital assets that we have chosen to analyze.  

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