Ethereum (ETH)
$240.24 (0.39 %) View coin
24 June 2020

Grayscale's ETHE down 53% in last 6 days

ETHE now trades at $91.33 and is down 53% since June 18th. From its $239.50 all time high reached June 4th, ETHE is down 61%. The ETHE premium to NAV has dropped down to ~380% from ~790% on June 18th and ~950% on June 4th. The premium collapse illustrates that the ETHE price drop is a product of investors selling ETHE shares, not the underlying ETH becoming less valuable.

While it’s unclear how many shares became unrestricted over the past 20 days, as we’ve laid out previously, a lot of ETHE shares will become so in the coming weeks. The collapsing premium could be a sign that accredited investors who created ETHE shares a year ago via private placements, are cashing out as their shares become unrestricted.

Why it matters: - The developments highlight the inequities between retail and accredited investors, who experienced vastly different outcomes in the past couple weeks. Retail investors saw more than half their positions wiped out, while accredited investors who bought in private placements probably made a ton of money. - It will be interesting to track how this develops in the coming weeks in months. As suggested by CMS, to the extent many accredited investors borrowed ETH to create ETHE shares, they will now need to buy spot ETH to pay down their debt. Furthermore, some investors may roll this trade by selling ETHE, buying back in spot markets, then creating new ETHE shares in a private placement.

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