Grayscale Ethereum Trust (ETHE) is now trading at a record high at a discount of 59.39% from the price Ethereum (ETH), per data from YCharts.
Although the fund was at one point trading at a significant premium to ETH, it has remained at a discount to market prices since November 2021.
ETHE allows traditional investors exposure to Ethereum without investing in the cryptocurrency themselves and is managed by Grayscale Capital, one of the largest institutional investors in the crypto world.
The fund, which has about $3.6 billion in assets under management (AUM), has lost about 68.37% of its value so far this year as ETH and other cryptocurrency assets fell more broadly.
GBTC is trading close to the benchmark discount
Grayscale’s sister fund, Grayscale Bitcoin Trust (GBTC), encounters similar problems.
According to YCharts, GBTC shares are currently trading at a discount of 45.17% to the Bitcoin price, up slightly from the record 48.89% discount recorded in mid-December. Although mutual fund investors can sell their shares at any time, they do not have access to the underlying cryptocurrency they are investing in.
Grayscale has been fighting the Securities and Exchange Commission since June for the right to convert cryptocurrency funds into exchange-traded funds (ETFs).Exchange Traded Funds), allowing them to be traded on public equity markets – which can greatly improve liquidity.
The news comes amid speculation about the financial condition of Grayscale and its parent company, Digital Currency Group (DCG).
In December, Dutch cryptocurrency exchange Bitvavo claimed in a blog post that DCG was “experiencing liquidity issues due to the current turmoil in the crypto market” and that DCG “has suspended payments until this liquidity issue is resolved.”
DCG argues that these liquidity issues are specific to the Genesis.
This huge discount is a problem Grayscale’s upper management is trying to address; Grayscale CEO Michael Sonnenstein wrote in a letter to investors at the end of the year that it would “explore other options to return some of GBTC’s capital to shareholders” if it fails in its fight to offer such funds as ETFs.
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