After falling 93% from its June 2019 all-time high, Grayscale Ethereum Trust (ETHE) is trading at a 60% discount. The decline is attributed to fallout from parent company Digital Currency Group’s debt of about $1.675 billion to Genesis. This could affect Grayscale assets.
Moreover, YCharts data shows a 59.39% discount. Majority of Grayscale’s trust funds are trading at a discount; Ethereum Classic Trust has been hit the hardest and it’s trading at 77% discount, Litecoin Trust at 65% and Bitcoin Cash Trust at 57%. It should be noted that two Grayscale Trusts are trading at a premium with the Filecon Trust at 108% and Chainlink Trust at 24%.
There are $3.7 billion worth of assets under the Grayscale Ethereum Trust pool, as per its official website, collected from 31 million shares. Per share, Ether is worth $11.77 with the market price per share being $4.77. DCG, Grayscale’s parent company, came in the limelight when the co-founder of Gemini Cameron Winklevoss called out Barry Silbert (DCG CEO) on Twitter. He said Genesis owes Gemini $900 million in funds lent to it as part of Gemini’s Earn product that the two companies ran in partnership.
Arcane Research believes the debt DCG and Genesis purportedly owe to Gemini could see DCG to initiate a Reg M distribution. This would be good for ETHE shares and bad for crypto markets. Arcane Research said the Reg M would cause a massive arbitrage strategy for selling crypto spot versus buying Grayscale Trust shares. And if it plays out, there could be further downside in crypto markets.