Grayscale’s Ethereum Investment Trust (ETHE) shares have plummeted by 50% in just four days in the OTC secondary markets.
Each share represents 0.094 Ether (ETH). The sharp decline has shown the trust’s share price premium falling from 750% to approximately 360% in less than two weeks.
The current ETHE price of USD 102.5 means that investors are willing to pay an implied price of USD 1,090 per Ether to access ETH through the trust in the OTC markets.
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The drop coincided with the release of many ETHE shares that were bought in the Grayscale primary market, which have a 12-month lock-in period. The expiry of this period resulted in many more shares being available on the secondary OTC markets.
Excitement precedes the fall
The excitement over the upcoming ETH 2.0 reform seems to have been reflected in ETHE shares, which recently traded at an implied price of USD 2,905 per Ether. If reflected in the actual price of Ether, this price would be equivalent to a market capitalization of USD 323 billion or almost double that of Bitcoin (BTC).
However, last week Ether’s Grayscale shares plummeted, and ETHE fell from $204 to less than $80 earlier in the day, before recovering above $100.
The strong sales in the ETHE markets have not affected Ether’s spot price; in fact, ETH has recorded slight gains: prices ranged from approximately USD 230 to USD 245 in the last four days.
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ETH/USD on Coinbase, 1D
ETH/USD on Coinbase, 1D: TradingView
ETHE’s premium is reduced
Grayscale’s Ethereum Investment Trust offers Bitcoin System exposure to institutions, and handles custody, purchase, tax and other technicalities associated with investing in cryptoactives.
Since early June, Grayscale has purchased $110 million of ETH in 2020 so far, which is approximately 0.4% of the entire Ethereum market capitalization in just five months.