Grayscale Ethereum Trust discount narrows to 10% as odds of spot ETH ETF approvals are raised

The Grayscale Ethereum Trust (ETHE) discount has narrowed to its lowest level in more than two months as investors anticipate spot ether ETF approvals in the U.S. 

The ETHE discount was roughly 10% as of the time of writing, down sharply from 20% the day prior. The narrowing comes as investors expect regulators to approve spot ether ETF approvals in the U.S., where the Securities Exchange Commission requested firms looking to launch such funds update and refile documents needed for their approval. 

The Grayscale Ethereum Trust is an investment vehicle that offers direct exposure to ether's price movements, according to Grayscale's website. The fund has more than $10 billion worth of ether in assets under management as of the time of writing.

At a technical level, the ETHE discount represents the difference between ETHE’s market cap and the underlying value of the fund's ether holdings. However, the discount is also widely regarded as a gauge for the likelihood of spot ether ETF approvals. 

Investors are rushing to snap up ETHE to get shares of the fund at a discount before its potential conversion into an ETF.  

Shortly before spot bitcoin ETFs clinched regulatory approval in the U.S. on Jan. 9, traders similarly narrowed the GBTC discount. 

Ether is trading at $3,769 as of this writing, up 22% in the past 24 hours, according to The Block's ETH price page.