Cash exchanges have suffered over the past two months, as highlighted by the Bitcoin output . Investors looking for another way to acquire digital assets, no group of investors currently pays more than those involved with Grayscale, in particular the Grayscale Ethereum Trust.
At press time, grayscale.co dictated that the market price per share of ETH was around $ 218 and ETH holdings per share were estimated at a mere $ 23.03. Therefore, this meant that investors paid a premium of more than 1000 percent to gain secure exposure to Ethereum's price performance .
In addition, it has also been established that the ETHE market price has increased by 743% since the beginning of 2020.
Now, according to a recent Longhash article, ETHE stocks have exploded due to the significant increase in demand for Ethereum in a wider market. The scale, the extent to which ETHE prices have gone up was evident given the fact that the world's largest altcoin has outperformed Bitcoin since the start of May, in terms of positive gains.
The market price per ETHE was also high at $ 239.50 on June 4, at a time when ETH was valued at $ 241.48. For comparison, ETH was priced higher at the time of writing, so the same value had dropped over the past week.
The sudden rise in premiums remains a mystery, as the post reads,
“ETHE shares trading effectively for the same price as Ethereum meant that investors bought exposure to cryptocurrency at an implicit price of around $ 2,500.
Are institutional investors also heavily involved with Ethereum ?
The attached graph shows that Grayscale's products are mainly generated and piloted by institutional investors. It is likely that some of these inputs are collected on the premium, since investors can sell at a premium in the over-the-counter markets after the freezing of their assets.
However, the premium may not be directly representative of institutional demand. The premium is simply a function of the absence of a reimbursement mechanism and the low awareness of individual investors about it.
Will the high premium last?
Fortunately, the premium should not last for retail investors.
Even though ETH is traded on the secondary market, market shares are issued through a private placement process that involves only accredited investors. Now institutions can also be accredited investors and can buy ETHE shares for the same valuation as the spot prices. However, they must keep their shares for a one-year retention period.
Now, according to reports, about $ 75 million will be released by the end of October, a figure that will be close to $ 100 million by 2020. After that, holders will have the option to liquidate them on the secondary market. for a profit on the premium.
As a result, the market share value of ETH will begin to decrease as the shares reach the secondary market.
