Grayscale Ethereum Trust (ETHE) is currently ethereum (ETH), according to YCharts data.
At one point, the fund was actually trading at a significant premium compared to ETH, but since November 2021, it has been continuously discounted compared to market prices.
ETHE allows traditional investors to gain exposure to Ethereum without investing in the cryptocurrency itself and is managed by Grayscale Capital, one of the largest institutional investors in the crypto world.
With approximately $3.6 billion in assets under management (AUM), the fund has lost approximately 68.37% of its value so far this year as ETH and other crypto assets have declined more broadly.
GBTC trades near record discount
Grayscale’s sister fund, Grayscale Bitcoin Trust (GBTC), facing a similar problem.
According to YCharts, GBTC shares are currently trading at a discount of 45.17% to the price of Bitcoin, up slightly from the record discount of 48.89% recorded in mid-December. Fund investors can sell their shares at any time, but they do not have access to the cryptocurrency in which they invest.
Grayscale has been fighting the SEC since June for the right to convert cryptocurrency funds into exchange-traded funds (ETFs), it will become available for trading on the public stock market, potentially significantly increasing liquidity.
The news comes amid speculation about the financial health of Grayscale and its parent company Digital Currency Group (DCG).
In December, Dutch crypto exchange Bitvavo said in a blog post that DCG was “experiencing liquidity issues due to the current turmoil in the cryptocurrency market,” and that DCG was “until this liquidity issue is resolved.” We are suspending payments,” he said.
DCG claims these liquidity issues are limited to Genesis.
This steep discount is a problem Grayscale management has been trying to address. In his year-end letter to investors, Grayscale CEO Michael Sonnenschein said that if he fails to fund ETFs, etc., he will “return part of GBTC’s capital to shareholders.” We will explore other options,” he said.