Shares in Grayscale’s Ether Trust Plummet 50% — and It’s Still Expensive

The premium on shares in Grayscale’s Ethereum Investment Trust plummeted 50% in less than one week
The premium on shares in Grayscale’s Ethereum Investment Trust plummeted 50% in less than one week

Shares in Grayscale’s Ethereum Investment Trust (ETHE) have crashed by 50% in just four days on the secondary, over-the-counter (OTC) markets.

With each share representing 0.094 Ether (ETH), the sharp retracement has seen the price premium on the trust’s shares fall from 750% to roughly 360% in less than two weeks.

ETHE’s current price of $102.5 means that investors are willing to pay an implied price of $1,090 per Ether in order to access ETH through the trust on the OTC markets.

The crash coincided with the unlocking of many ETHE shares that were purchased on Grayscale’s primary market — which have a 12-month lockup period. The expiration of this period resulted in many more shares being made available on the secondary OTC markets.

Excitement comes before a fall

Excitement around Ethereum’s forthcoming ETH 2.0 revamp appears to have been reflected in ETHE shares, which were recently trading for an implied price of $2,905 per Ether. If reflected in the real price of Ether, this price would equate to a market cap of $323 billion or close to double that of Bitcoin (BTC).

However, this past week has seen Grayscale’s Ether shares plummet — with ETHE falling from $204 to less than $80 earlier today, before rebounding back above $100.

ETHE/USD, 1D

ETHE/USD, 1D: TradingView

The heavy selling in the ETHE markets has not impacted the spot price of Ether, with ETH actually posting slight gains as prices oscillated between roughly $230 and $245 over the past four days.

ETH/USD on Coinbase, 1D

ETH/USD on Coinbase, 1D: TradingView

ETHE premium shrinks

Grayscale’s Ethereum Investment Trust offers ETH exposure to institutions while taking care of custody, purchasing, taxation, and other technicalities associated with investing in crypto assets.

As of early June, Grayscale had purchased $110 million worth of ETH in 2020 so far — equal to roughly 0.4% of Ethereum’s entire market cap in just five months.