The latest reports indicate that the premium set on shares in Grayscale’s Ethereum Investment Trust (ETHE) plunged by 50% in just four days. That crash happened in the over-the-counter (OTC) markets.
With every share translating to 0.094 Ether (ETH), this steep fall has seen the price premium on the trust’s shares drop from 750% to about 360% in less than two weeks. On the other hand, although Ethereum (ETH) has been under-performing in terms of pricing of late as anticipated, some find it profitable.
Ethereum still stands as the second-largest digital currency in the market capitalization list with an average of $7 billion daily trading value. ETH has a net worth of over $27 billion in current market value.
Nearly over 70% of ETH assets supply is in profit. Extensive analysis revealed that the profit margin has been derived from a comparison of the current price with the last time it moved on the chain. Ethereum’s Externally owned Accounts(EOAs) yield some money with the formula working in their favor.
Taking a look at ETHE, its current price of $102.5 indicates that investors want to pay an implied price of $1,090 per Ether to access ETH via the trust in the OTC markets. That crash coincided with the unlocking of a lot of ETHE shares that were acquired on Grayscale’s primary market with a lockup period of 12 months.
The expiration of the period translated to more shares becoming available on the secondary OTC markets.
Volatility And Excitement Comes Before A Drop
The excitement that is growing around Ethereum’s upcoming ETH 2.0 upgrade seems to have been reflected in the price of the ETHE shares. These shares were recently trading for an indicated price of $2,905 per Ether.
If it is reflected in the real price of Ether, the price would equate to a market capitalization of $323 billion or nearly double what Bitcoin is currently valued at. Nevertheless, the past week has been dominated by a major plunge in the Grayscale Ether shares. ETHE fell from $204 to below $80 on June 25 before rebounding above $100.
The massive selling experienced in the ETHE markets has not greatly affected the price of Ether. ETH posted slight gains as the prices oscillated between $230 and $245 in the last four days.
ETHE Premium Crumbles
Grayscale’s Ethereum Investment Trust is designed to provide ETH exposure to institutions. While doing that, it takes care of taxation, purchasing, custody, and other technicalities that are linked with investing in crypto and digital assets.
By early June, Grayscale had acquired $110 million worth of ETH in 2020 so far. That translates to about 0.4% of Ethereum’s total market capitalization in only five months.
ETH Markets Record Profits
The number of Ethereum active addresses (EOAs) holding over $0.1 ETH has crossed the three million mark. They are now approaching levels not seen since January 2018. This increase is happening right before the Ethereum 2.0 network upgrade.
Also, ETH demand continues to rise steadily forcing some investors to maximize their holdings. The latest reports revealed that Grayscale purchased over 50% of all mined Ether in 2020 to meet the demand of its clients.
Grayscale experts commented:
“As long term investors tend to accumulate more coins when the priced declines, the average percentage of supply in profit decreases; it means that after the selloff, Ethereum price has to increase to less to reach 80% mark of supply in profit.”
Naturally, when the price of a currency drops, it allows investors to accumulate more holdings at lower levels. Nevertheless, this will average the percentage of supply in profit. Surprisingly, ETH supply could comfortably yield some profit despite poor performance in price.
According to data compiled by Glassnode. ETH the supply profit was hovering at 80%. The last time the same percentage was attained, the market price was $700. Historic data shows that it is the third time this phenomenon has repeated itself since 2018.
June 2019 was the last time when the supply in profit hovered at 80%. ETH was trading at $360 then. Even though the price has decreased by more than 32% up to below $240 again supply profit hit 80%.