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Opinion: Ethereum Gains 40% As Grayscale Trust Unlocks Shares

Ethereum is up 40% over the past week and is at multi-year highs above $ 1,000 at time of publication. One of the explanations for the observed dynamics lies in the actions of the clients of the investment company Grayscale.

how notes Joshua Frank, CEO of the TIE analytical platform, on January 4, a large number of investors in the Ethereum trust ETHE received their shares after purchasing them through a private placement six months ago.

Until Friday, ETHE shares were trading at over 100% overpayment of Ethereum’s own price. Thus, large investors got an opportunity for arbitrage, which they realized by borrowing ETH and then investing them in a trust to receive shares of ETHE. To date, the overpayment on ETHE shares has dropped to 13.1%, despite an obvious increase in demand for cryptocurrency among participants in the spot market. In fact, since December 30, the price of ETHE has dropped from $ 17.45 to the current $ 12.

Initially, ETHE had a freezing period of 12 months prior to being sold on the market, but then Grayscale registered the trust with the US Securities and Exchange Commission (SEC), which reduced the waiting period to 6 months. As a result, many participants in the initial 12-month offering receive their shares this week. Grayscale trusts do not have the function of withdrawing the invested cryptocurrency, therefore, in order to return the asset to the lender, in many cases, clients buy it on the market using the proceeds from the sale of shares.

“Since many borrowed ETH, they had to buy it on the spot market in order to pay off creditors and close the deal. Much of the rise in ETH over the weekend is likely to be attributed to the described reason, as is the sharp drop in overpayment on ETHE, writes Frank. – This does not mean that the move was bullish for ETH, and I would not be surprised if ETHE overpayment rises again. Just large volumes for buying ETH and selling ETHE due to the unblocking of shares. ”

According to the latest reports from Grayscale, ETHE is currently the second largest trust under its management with a volume of assets of $ 3 billion. It is noteworthy that just today, the FTX exchange announced the listing of shares of ETHE, Bitcoin trust GBTC, as well as the Bitwise Index (BITW) on the spot and the futures markets, thanks to which traders have the opportunity to gamble on the overpayment of the corresponding instruments using long or short positions.

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