Grayscale Ethereum Trust (ETHE) Currently Trading At A Record 60% Discount

The investment product’s market price is currently down by 85.26% year-to-date.

The Grayscale Ethereum Trust (ETHE) has been on a steady decline, currently trading at a remarkable 60% discount to Net Asset Value (NAV) – its lowest premium rate since inception. The current metric underlines a general investor capitulation and decline in market sentiment as investors seek to sell off their shares at discounted rates.

CryptoQuant verified author JA Maartun recently pointed out the bearish performance, highlighting the trend of decline suffered by the investment product. 

Grayscale #Ethereum Trust ($ETHE) making new lows, after new lows after new lows. The discount is at -60% ❗https://t.co/KGJrm0n0Ed pic.twitter.com/5CuwRNRJfS

— Maartunn (@JA_Maartun) January 2, 2023

Following a gradual improvement in September of last year, ETHE’s premium rate collapsed to new lows amid the poor price performance of ETH in October, which put investors’ confidence to the test. The FTX debacle of November was the final nail in the coffin, triggering a wave of capitulation that sent the fund’s premium rate on a constant decline, eventually leading to the current 60% discount rate.

The last time the fund’s premium rate traded above 100% was in June 2021. Despite the bull run of 2021, ETHE’s premium rate failed to reclaim the 100% territory. The underperformance persisted into 2022 and subsequently worsened. As a result of the year-long market downturns, it has steadily declined to new lows. Moreover, the broader Ethereum Fund Premium Index from CryptoQuant is in bearish territory, generally indicating weak buying sentiments from investors. 

Grayscale’s Unique Issues 

Besides the underlying bear market, unique issues facing Digital Currency Group (DCG), Grayscale’s parent company, have contributed to the fund’s woes. Genesis, a leading crypto lending firm and a subsidiary of DCG, announced a decision to pause customer withdrawals last November due to a liquidity crunch amid the FTX collapse. Despite Grayscale’s attempt to publicly isolate itself from its sister company’s woes, concerns abound. 

Grayscale’s affiliation with Genesis contributed to greater investor dread. As reported last month, this affected Grayscale’s largest product, the Grayscale Bitcoin Trust (GBTC). GBTC’s premium rate suffered massive declines, eventually leading to record discounts.

At the time of reporting, ETHE’s market price has declined by 31.47% in the past month, with an 85.26% crash year-to-date. Additionally, the fund’s share has collapsed by 68.71% YTD. Despite these unfavorable metrics, shares have appreciated by 47.05% since inception, data from Grayscale suggests.