Ethereum token ETH price has surged; however, Grayscale Ethereum Trust shares have plummeted badly due to a flurry of new shares afloat in the market after investors come out of the lock-in period and start to sell their shares.
ETHE shares have fallen by 22 percent even though ETH price has gone up by 10 percent.
Grayscale Ethereum Trust investment strategy fuels Ether price.
The recent fall in Grayscale Ethereum Trust shares is accounted for the increase in the number of Ethereum shares available in the market for trading. As the institutional investors line up to sell the shares of the trust after the restriction of the lockup period ended. Investors purchased ETHE shares at a discounted price, and now the investors need to pay back in ETH.
As per the CEO of The TIE, Joshua Frank, the price of Ethereum token ETH would surge further as the significant private placement investors near their lockup periods and receive their shares. He further detailed that institutional investors must borrow ETH at an interest of 8 % per annum. He added, “As an accredited or institutional investor that is interested in investing in a Grayscale product, you can give them cash or a crypto in-kind, as in ETH for ETHE,
ETHE, which is a $3.5 billion fund, plummeted on January 4th, 2021. After the lockup period ended, around 116 million shares were floated in markets for trade while there were already 49 million shares available. The massive divergence showcases the mispricing, which can whipsaw traders. Grayscale Ethereum Trust is an investment vehicle that lets high worth investors invest in Ethereum.
The inefficiencies of the ETHE funds have showcased the need for the United States Securities and Exchange Commission for regulating and approving cryptocurrency ETF. The Associate analyst at Bloomberg James Seyfarth noted that “By failing to allow a crypto ETF in the U.S., the SEC has left retail investors exposed to significant risks via wide mispricing in less-efficient vehicles while giving an advantage to accredited investors such as wealthy individuals, hedge funds and private-equity firms.”
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