Cardano Tumbles As Grayscale Sells All ADA From GDLC Fund

Cardano (ADA) price has experienced a notable decline, dropping 12% since the beginning of the week and recording a 2.6% decline today alone. Nevertheless, ADA maintains its position as the 9th largest cryptocurrency with a market capitalization of $20.27 billion.

This recent downturn comes as the broader crypto market is on a near-flat to downward trend, with ADA posting larger losses compared to peers such as ETH, 7.4% for ETH, and BNB is down 6.4%, Solana is down 6.3%, and XRP is down 6.1%. %.

Grayscale dump from GDLC Cardano

A pivotal factor behind Cardano’s sharp decline could be related to the recent liquidation of all ADA holdings by the Grayscale Digital Large Cap Fund (GDLC). The fund, which currently has assets under management (AUM) worth $579 million, had Cardano accounting for 1.62% of its portfolio (worth about $9.4 million) as of January 4.

On Thursday, Grayscale Investments announced the decision as part of its review for the first quarter of 2024.According to officials press releaseGDLC’s portfolio adjustment involved selling Cardano and reallocating the cash proceeds to existing fund components in proportion to their weightings.

This rebalancing removed ADA from GDLC’s portfolio. The final composition of the fund as of April 3, 2024 includes Bitcoin (70.96%), Ethereum (21.84%), Solana (4.52%), XRP (1.73%), and Avalanche (0.95%).

“Following the methodology of the CoinDesk Large Cap Select Index, Grayscale will sell Cardano (ADA) and use the cash proceeds to purchase existing fund components in proportion to their respective weights to expand the GDLC portfolio,” the press release states. As a result of the rebalance, Cardano (ADA) has been removed from GDLC. ”

Grayscale also highlighted quarterly evaluations of GDLC, DEFG, and GSCPxE fund structures aimed at updating existing fund components or including new fund components based on index methodologies provided by index providers. . This ensures that the fund’s holdings reflect the latest market trends and asset performance.

Notably, the Grayscale Smart Contract Platform Ex-Ethereum Fund still includes Cardano. This cryptocurrency occupies his second largest position after Solana (58.41%), with a weight of 14.56%.

In response to these developments, Cardano founder Charles Hoskinson provided a brief comment via X, saying: That’s Wall Street’s view. ”

This succinct statement encapsulates the volatile nature of crypto investments and the significant impact that large financial players like Grayscale can have on market trends in digital assets.

At the time of writing, ADA was trading at $0.57. In the short term, the 100-day EMA at $0.58 will be the key resistance that ADA will need to overcome to generate new bullish momentum. The 100-day EMA has acted as strong support three times since mid-January. ADA has struggled to regain this metric after falling below it recently. In the medium term, the bulls need to break out of the $0.68 level.

ADA price, 1 day chart | Source: ADAUSD on TradingView.com

Featured image from Guarda Wallet, chart from TradingView.com

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