The Greyscale Ethereum Trust (ETHE) is currently trading at an unprecedented 59.39% discount compared to Ethereum’s (ETH) price, according to data from YCharts. Since November 2021, the fund has traded at a continuous discount to market prices, even though it had previously been trading at an impressive premium relative to ETH.
By investing in the Greyscale Ethereum Trust ETHE, traditional investors can gain access to this lucrative asset without purchasing the cryptocurrency itself. Grayscale Capital, one of the crypto industry’s premier institutional firms, manages it and provides traders with a secure avenue for trading.
With its $3.6 billion assets under management (AUM), this fund has had a significant loss of 68.37% in value this year until now, as ETH and other digital currencies have seen an overall drop across the board.
GBTC hits an all-time low and trades with a substantial discount
Grayscale’s sister fund, the Grayscale Bitcoin Trust (GBTC), is facing the same issues. According to YCharts’ data, shares in GBTC are trading at a 45.17% discount compared to Bitcoin’s current price – an improvement from the record low of 48.89%, which was witnessed in mid-December. While fund investors can sell their portions anytime they want, they don’t have direct access to the underlying cryptocurrency itself.
Last December, Valkyrie Investments declared it was prepared to become a “sponsor and manager” of Digital Currency Group’s struggling fund. Furthermore, the company presented a proposal for how this would be accomplished.
At the beginning of December, Grayscale announced its intention to explore returning up to 20% of GBTC’s capital back to shareholders if it couldn’t be converted into an exchange-traded fund.
Fighting with SEC
Grayscale has been waging a legal war with the SEC since June in an effort to turn its cryptocurrency funds into Exchange-traded Funds (ETFs). Doing so would give investors access to buy and sell them on public stock exchanges, thus drastically improving their liquidity.
Reports have surfaced questioning Grayscale, and its parent company Digital Currency Group (DCG), ‘s financial stability, prompting further investigations into the matter. In December, Dutch cryptocurrency exchange Bitvavo divulged in a blog post that DCG is facing difficulty with liquidity due to the recent instability in the crypto market and has consequently suspended repayments until this problem is resolved.
DCG is adamant that the liquidity issues solely affect Genesis.
Grayscale’s top executives have been striving to tackle the issue of this hefty discount. Michael Sonnenshein, Grayscale’s CEO, wrote in a letter that it would “explore other possibilities for providing a portion of GBTC’s capital back to shareholders” should their efforts to present such funds as ETFs fail.