Investors are paying a 515% premium to buy Ether through the Grayscale Ethereum Trust.
It costs $90.55 to buy a share in Grayscale Investments’ Ethereum Trust (ETHE), however its Ether holdings per share are currently worth just $16.10. That means it’s five times more expensive to buy Ether via the trust than on the open market.
While the ETHE premium goes up and down regularly, it is now significantly higher than the 220% it was reported at in February. The gap was even wider — 1,150% — when ETHE first started trading in OTC markets in June 2019.
After passing $1 billion in investments for 2019, Grayscale’s Ethereum Trust currently has $195.1 million in assets under management. The market price is up 238% over the past three months while its Ether holdings are up 22% over the same period. However they are down almost 7% over the past 12 months, and 78% since inception.
Paying premiums to avoid taxes and regulations
The ETHE trust is targeted at investors willing to pay more for regulatory oversight and to avoid risk. Anyone thinking about a potential arbitrage opportunity, however, should note all ETHE shares require a one-year holding period after they’re created. In addition, the trust requires all investors to be accredited, with a minimum of $25K to start.
Grayscale Bitcoin Trust still considered 'digital gold'
The United States-based investment firm also offers a trust for other large cryptocurrencies, including Bitcoin (BTC). The Grayscale Bitcoin Trust is the firm’s largest holding, with over $2 billion in assets under management.
The Grayscale Bitcoin Trust is a considerably buy than its Ethereum Trust, with $7.04 worth of Bitcoin holdings per share, which trade for just $7.80 each. Its Bitcoin holdings have increased in value by almost 5000% since inception.