As the U.S. presidential election approaches, investors are eyeing opportunities in the crypto market. Two standout funds—Grayscale Investments’ Digital Large Cap Fund (GDLC) and Bitwise Asset Management’s Bitwise 10 Crypto Index Fund—are being touted as potential winners if Donald Trump secures a victory. According to financial research firm Fundstrat, both funds could provide attractive returns in a post-election landscape.
Grayscale’s GDLC: A Potential Game-Changer
On Tuesday, NYSE Arca submitted an application to the SEC to convert the Grayscale Digital Large Cap Fund into an exchange-traded fund (ETF).
The Current Landscape
- GDLC tracks the CoinDesk Large Cap Select Index, which includes major cryptocurrencies like:
- Bitcoin (BTC)
- Ether (ETH)
- Solana (SOL)
- XRP
- Avalanche (AVAX)
Currently, GDLC is trading over-the-counter at a significant 18.5% discount to its net asset value (NAV). If the SEC approves the conversion to an ETF, this discount is expected to disappear, making it an attractive investment opportunity.
The Trump Trade
Investing in GDLC can be viewed as a “Trump trade.”
- Sean Farrell, head of digital asset strategy at Fundstrat, noted that the SEC under Biden is likely to reject Grayscale’s application. However, under a Trump administration, the SEC may adopt a more crypto-friendly stance.
The implication? If Trump wins, GDLC could see a significant uptick in investor interest, as an ETF would enable a smoother trading experience, allowing for better alignment between market price and NAV.
Projected Returns
If GDLC converts to an ETF and its price aligns with NAV, the fund could potentially deliver a 23% return, assuming no appreciation in underlying assets.
Bitwise’s Potential Surge
Bitwise’s Bitwise 10 Crypto Index Fund (BITW) is also seen as a viable option in this scenario.
- Similar to GDLC, BITW tracks a diversified index of the ten most highly valued cryptocurrencies.
Currently, BITW is trading at a 24% discount to its NAV. If the fund’s market price converges with its NAV, it could yield a 37% return, excluding any price appreciation in the underlying assets.
Why Trump Matters
The potential for regulatory changes under a Trump administration is crucial here.
- The Biden administration has allowed ETFs investing directly in Bitcoin and Ether but has rejected proposals for ETFs linked to smaller cryptocurrencies.
- If Trump wins, there’s a real possibility that the SEC could become more lenient, paving the way for broader crypto investment vehicles.
The Bigger Picture: Crypto’s Growing Appeal
The growing interest in crypto investments isn’t just about the political landscape; it reflects a broader shift in market sentiment.
- Market dynamics: Investors are increasingly looking to diversify their portfolios, and cryptocurrencies are becoming a popular choice.
- Institutional interest: With large institutional players entering the space, the potential for growth is immense.
Conclusion: Timing Your Investment
In the lead-up to the election, savvy investors should consider the potential benefits of investing in GDLC and BITW.
- If Trump wins, the regulatory landscape could shift dramatically, benefiting these funds.
- However, it’s essential to understand the risks involved, especially with the current volatility in the crypto market.
The question is: Are you ready to make your move in this volatile yet promising market? Investing in these funds could be a strategic way to position yourself for potential gains if Trump takes the presidency.
