Crypto investment company Grayscale just converted its Digital Large Cap Fund into a new exchange-traded fund: The Grayscale Coindesk Crypto 5 ETF.
While that may sound like financial gibberish to you, it’s actually a pretty big deal: The new fund bundles multiple cryptocurrencies into one investment for the first time ever.
The first-of-its-kind fund was approved by the SEC last Wednesday, and Grayscale wasted no time launching it on Friday. The fund tracks the five biggest crypto assets by market cap: bitcoin, ether, XRP, Solana, and Cardano. Roughly 70% of the fund is in bitcoin, 17% is allocated to ether, and the rest is distributed among the smaller cryptos.
“The result is coverage of roughly 90% of the entire crypto market in a single product,” explained Grayscale’s Senior Vice President of ETF Capital Markets Krista Lynch. “We believe this has the potential to become the crypto market’s equivalent of the S&P 500: a diversified, broad-based foundation for investors.”
A whole new wave of crypto investment vehicles have launched since the SEC greenlit a spot bitcoin fund back in January 2024. While most of these digital asset funds focus on singular cryptocurrencies, combining coverage into one fund seems like a logical next step.
“Investors have become increasingly comfortable with Bitcoin, but venturing beyond it into other digital assets can feel daunting. The question quickly becomes: Which tokens do I choose, and how do I evaluate them? Multi-asset products take that burden off the individual investor,” added Lynch.
Lots and lots and lots of choices
The newest launch from Grayscale also comes as the SEC is amending its Generic Listing Standards regarding commodity ETFs, which will subsequently make it easier and faster for ETF issuers to bring new crypto funds to market.
But so many new ETFs—from leveraged single stock funds, investments that track politicians' trades, and now a whole new array of crypto funds—can lead to a paradox of choice, in which investors have more options than they can responsibly handle.
Case in point: Last month, the number of ETFs officially outpaced the number of stocks for the first time ever.
At this rate, soon we’ll need an ETF that tracks all the ETFs.—LB
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