Grayscale Investments has updated its Top 20 assets list for Q3 2025, adding Avalanche (AVAX) and Morpho (MORPHO) while removing Lido (LDO) and Optimism (OP). This strategic shift highlights the firm’s focus on cryptocurrencies demonstrating strong innovation and user adoption in areas like decentralized finance and smart contract platforms.
Why Avalanche and Morpho Were Added
Avalanche’s Ecosystem Growth
Avalanche secured its position due to significant on-chain transaction growth, largely driven by gaming integrations like MapleStory and increased stablecoin usage. Grayscale highlighted Avalanche’s ability to process high volumes of transactions efficiently, pointing to robust fundamentals and organic ecosystem expansion.
Even during market downturns, AVAX has maintained a price above $17, with analysts suggesting a potential rise toward $20 if bullish trends continue. This resilience and utility make it a compelling choice for institutional portfolios.
Morpho’s DeFi Innovations
Morpho earned its spot through groundbreaking work in decentralized finance, particularly with the launch of Morpho V2. This upgrade introduced market-driven, fixed-rate loans with flexible terms, effectively bridging traditional and decentralized finance.
Grayscale noted that Morpho’s alignment with institutional requirements—such as predictable loan structures and support for real-world assets (RWAs)—positions it well to capture growing demand in on-chain lending.
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Assets Removed: Lido and Optimism
Lido was excluded primarily due to regulatory uncertainties surrounding staking services, which could impact its fee-based revenue model. Optimism, despite its technical merits as a Layer 2 scaling solution, was removed for failing to capture sufficient economic value in the current market landscape.
These decisions were based on Grayscale’s proprietary crypto sector taxonomy, developed in partnership with FTSE Russell, emphasizing assets with clear utility and growth trajectories.
Broader Portfolio Strategy
Grayscale’s Top 20 list includes established cryptocurrencies like Bitcoin and Ethereum alongside higher-growth assets like Solana. The firm acknowledges the inherent volatility of these investments but anticipates strong performance in Q3 2025 based on current market trends.
This rebalancing reflects a targeted approach to portfolio construction, prioritizing tokens with solid fundamentals, clear use cases, and reduced regulatory exposure.
Frequently Asked Questions
Why did Grayscale add AVAX to its portfolio?
AVAX was added due to its growing transaction volume, strength in gaming and stablecoin applications, and robust network performance. These factors indicate strong organic growth and potential for future valuation increases.
What makes Morpho attractive to institutional investors?
Morpho’s V2 upgrade introduces fixed-rate, flexible-term loans and supports real-world assets, making it more compatible with traditional finance requirements. This innovation expands its use cases and reduces typical DeFi volatility.
Why were Lido and Optimism removed?
Lido faces regulatory challenges that may affect its revenue model, while Optimism has not yet generated significant economic activity relative to its competitors. Grayscale prioritizes assets with clearer growth pathways and lower regulatory risk.
How often does Grayscale update its holdings?
Grayscale periodically reviews and adjusts its portfolio based on performance, innovation, regulatory changes, and market trends. These updates ensure the portfolio reflects the most promising assets in the crypto sector.
Is Grayscale’s Top 20 list a good investment guide?
While Grayscale’s research is influential, it’s important to conduct personal due diligence. The list reflects institutional confidence but does not guarantee performance, as all cryptocurrencies carry significant risk.
What sectors is Grayscale focusing on for 2025?
Grayscale is emphasizing decentralized finance, scalable smart contract platforms, and projects merging traditional finance with blockchain technology. These areas show strong user adoption and innovation potential.