Grayscale Ethereum Trust nears record -60% discount

Quick Take

  • The Grayscale Ethereum Trust is trading at its highest discount yet of nearly -60%.
  • The Grayscale Bitcoin Trust has not fared better, hitting record discounts near -50% in December 2022.

The Grayscale Ethereum Trust (ETHE), a traditional investment vehicle providing institutional investors with passive exposure to the price of ether, is trading at its highest discount yet of almost -60%.

ETHE's discount to net asset value has been in a general decline since the end of 2020, but accelerated in Q4 of last year. Before Q2 2021, it consistently traded at a premium — hitting a high of nearly 950% in June 2020.

 

ETHE's decline can be attributed to multiple factors. "It's likely a combination of low faith in the fund being redeemable anytime soon, low faith in a spot ETF being approved anytime soon and low faith in the general crypto-market outlook," said Larry Cermak, The Block's VP of Research.

GBTC woes accelerated last month

The Grayscale Bitcoin Trust (GBTC) has not fared much better. It currently has a discount of 45%, having hit record discounts near -50% in Dec. 2022.

In December, Valkyrie Investments said it had a proposal for Digital Currency Group’s struggling fund and claimed it was ready to become a "sponsor and manager" of it.

Earlier in December, Grayscale also said it would explore how to return up to 20% of GBTC's capital to shareholders if it cannot turn the product into an exchange-traded fund.

Fighting with Gemini

Aside from GBTC's and ETHE's struggles, Digital Currency Group has been thrust into the spotlight for legal reasons.

Three users of crypto exchange Gemini's Earn program have filed a request for class-action arbitration against Genesis Global Capital and Digital Currency Group after Genesis froze withdrawals, which forced Gemini to do the same with Earn. DCG head Barry Silbert has also engaged in a public dispute with Gemini co-founder Cameron Winklevoss on Twitter.

Updated for clarity.


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