After the SEC approved 11 spot Bitcoin ETFs last week, a key indicator points toward investors positioning themselves for a similar outcome for ETH.<\/p>\n
The discount for ETHE, a publicly traded investment vehicle which provides exposure to ETH, has narrowed to 15% today after trading at 47% one year ago. The discount refers to the difference between ETHE\u2019s market cap and the value of the underlying Ether held by the fund.<\/p>\n
<\/p>\n <\/a><\/p>\n Before its conversion to an ETF last week, GBTC\u2019s discount behaved similarly<\/a>, suggesting to some that ETHE may ultimately follow the same path.<\/p>\n <\/p>\n \u201cNow that we have everybody issuing a Bitcoin ETF, it\u2019s only a matter of time until we see an ETH ETF,\u201d Stefan Rust<\/a>, CEO of economic data aggregator Truflation, told The Defiant.<\/p>\n Unlike GBTC, ETHE can still trade at a discount \u2014or premium, as was the case for much of the product\u2019s life\u2014 because it is a closed-end fund, meaning that shares aren\u2019t issued or destroyed frequently in response to investor demand, as is the case with ETFs.<\/p>\n ETHE has $7.6B in assets under management as of Jan. 15, according to its issuer Grayscale<\/a>.<\/p>\n With the discount on ETHE narrowing, it\u2019s likely investors are looking to front-run the possible conversion of the product to an ETF, which would cause the discount to close completely.<\/p>\n Grayscale filed<\/a> to convert ETHE to an ETF last October. That move came just over a month after a U.S. court ruled<\/a> that the SEC did not provide an adequate explanation for its denial of Grayscale\u2019s application to convert GBTC in late August 2023. The SEC has since postponed<\/a> the decision date for a potential ETHE conversion to Jan. 25.<\/p>\n To be sure, while the price action indicates investors are betting on an ETHE conversion, there are continuing signs of unrest at Digital Currency Group (DCG) Grayscale\u2019s parent company \u2014 Barry Silbert, CEO and founder of DCG, resigned from his role as Grayscale chairman last month.<\/p>\n <\/p>\n Start for free<\/a><\/div>\n <\/p>\n Silbert stepped down after the New York Attorney General filed<\/a> a complaint in October against Silbert, DCG, and Genesis, another DCG subsidiary which went bankrupt<\/a> in January 2023. The SEC also charged<\/a> Genesis with offering unregistered securities that same month and is also probing the subsidiary\u2019s transactions with DCG, per Bloomberg<\/a>.<\/p>\n Raul Calvo, co-founder of Diva Staking<\/a>, a liquid staking protocol, noted that the investigation into Barry Silbert and DCG did appear to dampen the market\u2019s interest in ETHE. The co-founder suggested that before GBTC\u2019s conversion, investors weren\u2019t sure whether Grayscale would be approved to launch an ETF representing any asset.<\/p>\n That sentiment changed with GBTC\u2019s conversion last week, Calvo told The Defiant.<\/p>\n In light of the conversion, some have suggested that DCG is selling ETHE, in which the company holds a large stake, to cover liabilities created by the bankrupt Genesis \u2014 while the medium-term trend has been for the discount to close, since GBTC\u2019s approval on Jan. 10, ETHE has drifted in the opposite direction.<\/p>\n \u201cNot a TradFi guy, so take with a grain of salt, but ETHE discount to NAV is deepening from DCG paying off its loans with ETHE collateral,\u201d Danger, a pseudonymous investor, said<\/a> on X.<\/p>\n DCG did not respond to The Defiant\u2019s request for comment about whether it is selling its ETHE holdings.<\/p>\n Danger doesn\u2019t necessarily see the selling as a bad sign for ETHE, calling the alleged transactions \u201cforced selling.\u201d<\/p>\n \u201cIf you think an ETH ETF will happen, ETHE may be a way to play ETH + discount close,\u201d he said, adding that he holds ETHE.<\/p>\n![\"the-defiant\"](\"https:\/\/thedefiant.io\/_next\/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2F77cbe54d691f26963cf8b78cc5edf9454058519c-1600x905.jpg&w=828&q=100\")
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