Grayscale’s Q3 2025 Crypto Update: New Entrants and Exclusions Explained

Grayscale has recently announced its updated Top 20 cryptocurrency assets for the third quarter of 2025, marking significant shifts in its selection criteria. The report, released on July 26, highlights the additions of Avalanche (AVAX) and Morpho while removing Optimism and Lido DAO from the list. This round of updates illustrates Grayscale’s commitment to a research-driven selection process that prioritizes on-chain traction over mere popularity or market capitalization.

The revamped Top 20 list now features a blend of well-established cryptocurrencies such as Bitcoin, Ethereum, and Solana, alongside decentralized finance (DeFi) protocols like Aave and Uniswap. The inclusion of newer players such as Bittensor, Ethena, Story Protocol, Aerodrome, and Geodnet signals a diversification of assets aimed at capturing market trends and investment opportunities.

Why Avalanche and Morpho Made the Cut

Avalanche’s rise in Grayscale’s rankings can be attributed to a significant uptick in ecosystem activity. The firm noted a marked increase in transaction volumes, which Grayscale links to the growing popularity of blockchain-powered gaming applications and stablecoin usage within the Avalanche network. While doubts about the sustainability of this surge linger, the data indicates promising growth signals, suggesting a healthy onboarding of new users and applications.

Conversely, Morpho’s addition is driven by its remarkable growth metrics over the past year. The DeFi lending protocol has doubled its total value to over $4 billion and reported an impressive annualized fee income nearing $100 million. Furthermore, Morpho’s upcoming second version aims to cater to institutional investors, thereby strengthening its positioning within the competitive DeFi space. Grayscale’s optimism regarding Morpho reflects a broader positive sentiment concerning the future of on-chain lending and related protocols such as Aave and Maple Finance.

The Omission of High-Profile Assets

Interestingly, Grayscale’s updated list does not include notable digital assets like XRP, Cardano, BNB, and TRON, despite their large market caps. This exclusion highlights Grayscale’s emphasis on fundamentals, upcoming catalysts, and sustainable network activity rather than size alone. Notably, XRP and Cardano have been making strides in ecosystem development and institutional adoption but have underperformed in terms of price momentum.

For instance, XRP has garnered attention due to Ripple’s enterprise partnerships and the ongoing evolution of the XRP Ledger. Similarly, Cardano has made significant advancements in its scaling roadmap and aims to integrate Bitcoin into its DeFi ecosystem. Nevertheless, both assets have struggled with price performance; XRP has declined over 4% year-to-date, while Cardano’s ADA has fallen more than 35%, creating questions about their respective futures.

Focus on On-Chain Fundamentals

Grayscale’s Top 20 list reflects a thorough analysis of various cryptocurrencies based on their on-chain fundamentals and market trends. This method prioritizes projects that exhibit strong network activity and sustainable growth potential. The firm indicated that emerging protocols with robust use cases are shaping the future landscape of the cryptocurrency market, making it critical for investors to pay attention to these dynamics.

Projects like Avalanche and Morpho represent a shift from established assets, as investors increasingly seek innovative solutions that cater to emerging trends such as blockchain gaming and DeFi lending. As the industry evolves, Grayscale’s focus on on-chain metrics will likely influence market sentiment and investment strategies in the coming quarters.

Implications for Future Investments

With Grayscale’s revised list signaling a shift towards assets with higher on-chain traction, investors must carefully assess their portfolios and consider reallocating resources to align with these trends. The losses of prominent digital assets like XRP and Cardano may prompt investors to rethink their positions, especially as new entrants demonstrate greater agility and market responsiveness.

The focus on emerging technologies, particularly those in the DeFi space, suggests that traditional investment strategies may need to be reconsidered. Investors will benefit from staying informed about the performance of newly added cryptocurrencies, as they may offer high growth potential compared to their long-established counterparts.

Conclusion: Embracing Innovation in Crypto

Grayscale’s Q3 2025 Top 20 crypto assets list epitomizes the dynamic nature of the cryptocurrency market, showcasing how rapidly evolving technologies can reshape investment landscapes. The introduction of Avalanche and Morpho reflects a broader trend of prioritizing assets with proven engagement and innovative use cases.

As the industry progresses, key players must remain adaptable and proactive in embracing novel investment opportunities. With a keen focus on fundamentals, Grayscale is setting a significant tone for future investments in crypto, highlighting the importance of staying abreast of market changes and emerging trends to ensure long-term growth potential in this exciting realm.