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Grayscale’s Ethereum Trust (ETHE) stock appears to have found firmer footing as the key May deadline for applications for Ethereum spot exchange-traded funds (ETFs) in the U.S. approaches.
As of Friday, Grayscale’s ETHE stock was trading at a 22% discount to the fund’s cryptocurrency holdings. Y chart. Since March 22, discounts have ranged between 21% and 26%, up from 8% at the beginning of the month.
Many cryptocurrency market analysts have expressed doubts that a spot Ethereum ETF will be approved in the United States in the near term. We’ll find out soon, as the Securities and Exchange Commission (SEC) has until May 25 to respond to asset manager VanEck’s initial application for the product.
Mark Connors, head of research at digital asset investment firm 3iQ, said: decryption ETHE’s steady discount reflects “pricing in on the downside of regulation (as well as) the positive aspects of industry actions.”
Meanwhile, the odds of a spot Ethereum ETF being approved in May have decreased from 76% in January to 6% on Monday, according to prediction platform traders. Polymarket. These opportunities were not helped by the SEC’s revelations last April. View internally Ethereum as a security.
Approval odds for spot Bitcoin ETFs were first boosted by Grayscale last year. court victory Above the SEC. The judge found the agency’s previous rejection of grayscale to be arbitrary and capricious. This decision paved the way for the approval of spot Bitcoin ETFs in January, including the conversion of Grayscale Bitcoin Trust (GBTC).
Conors explained that he was able to take advantage of GBTC’s decreasing discount rate by selling Bitcoin while holding GBTC. As for why ETHE’s discount has remained largely unchanged over the past few weeks, Connors said some may be poised for a repeat. We hold ETHE through possible litigation following the SEC’s expected rejection.
“People got rewarded for it,” Connors said, referring to institutions that traded GBTC by converting it into ETFs. “There are a lot of hedge funds that know about this trade.”
like It was like that once With GBTC, ETHE trades at a discount or premium compared to your cryptocurrency holdings due to the fund structure. With no mechanism in place for share creation or redemption, ETHE’s discount increased to 60% in early 2023.
Each stock of ETHE corresponding This is approximately 0.0094 Ethereum (equivalent to approximately $29). However, due to the fund structure, ETHE stock currently trades at $22.50.
Along with VanEck’s bid to establish a new spot Ethereum ETF, Grayscale also wants to convert its fund into one. They are among several companies awaiting a response from the SEC, including BlackRock, Fidelity, Hashdex, Invesco and Galaxy, Ark Invest and 21Shares.
Edited by Ryan Ozawa.