Grayscale’s Ethereum Trust (ETHE), which allows institutional investors to invest in ETH, is currently trading at a 60% discount to the CoinDesk Ether Price (ETX) index it is supposed to track. This is an additional issue that must be managed by Digital Currency Group (DCG), the parent company of Grayscale, which is in particular in dispute with Gemini.
Grayscale’s ETHE posts its biggest discount since its inception
Grayscale, the company known for offering cryptocurrency investment vehicles to institutional investors, sees its Grayscale Ethereum Trust (ETHE) product display its biggest discount since its creation. ETHE, launched in June 2019, is supposed to follow the price of ETH through the CoinDesk Ether Price Index (ETX). While the latter is valued at $11.72, ETHE trades at $4.77 per unit, which represents a difference of 60%.
As ETHE is not listed as an ETF, it is traded over-the-counter (OTC), which explains why its price can de-index from its underlying upwards or downwards, depending on the psychology of the market players. The graph below shows that before the explosion in prices during the previous bull market, ETHE enjoyed a positive spread with the ETX:
Evolution of Grayscale’s ETHE (in grey) against the CoinDesk Ether Price Index (in green)
Today, the situation is quite different, when ETHE has a capitalization of 3.6 billion dollars for a minimum entry ticket of 25,000 dollars and 2.5% annual management fees.
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A scenario similar to GBTC
The situation of the Grayscale Ethereum Trust is not unlike that of the GBTC, issued by the same company. The GBTC has moreover played an important role in the bankruptcy of the investment fund Three Arrows Capital (3AC), and enters into the composition of the ETF ARK Next Generation Internet (ARKW) of Cathie Wood’s Ark Invest company.
This devaluation of ETHE, which certainly did not start today, comes all the same fit into a particular context for Grayscale. And for good reason, its parent company, Digital Currency Group (DCG), is currently in the news for its dispute with the Gemini cryptocurrency exchange.
This is therefore an additional difficulty that DCG has to face, who was affected in the FTX caselike other companies in the ecosystem.
👉 Also in the news – Terra crash: Three Arrows Capital co-founder accuses Digital Currency Group and FTX
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Source: Grayscale
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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