Why is the confidence of Ethereum’s gray tones breaking down today

What happened

Stocks Trust the gray tones of Ethereum (OTC: ETHE), a fund designed to allow traditional investors to invest in non-traditional assets known as Ether, are broken today. From 11:20 a.m. EST is reduced by an incredible 18%. In contrast, Ether has fallen only 3% in the last 24 hours. In theory, the movements should not diverge so much. What does it give?

So what

Objectively, I can say that the Grayscale Ethereum Trust is extremely overvalued and that is why stocks are falling today. On the fund’s own website, under market effect, investors are explained how much each share is worth. Currently, at the current price of ether, the fund holds ether worth $ 6.34 per share. However, the stock is currently trading over $ 16 per share – more than double their essential value.

Image source: Getty Images.

I’m not sure why the Grayscale Ethereum Trust even started to differ from the price of ether. But as the following chart shows, it’s been a wild few months.

ETHE chart

ETHE data from YCharts

The Grayscale Ethereum Trust underwent a 9-for-1 share split on December 17, which could have caused some confusion among investors regarding the actual value of the shares. However, this theory lags behind because the Grayscale Ethereum Trust grew rapidly before the division and has since collapsed. Note that the chart is tailored to the division.

But why is the confidence of Ethereum grayscale falling today? The most likely explanation is that traders know this has gone well, and they are making a profit now before the end of the year for tax purposes.

What now

Since the trust of Grayscale Ethereum is still overvalued even after today’s fall, I wouldn’t be surprised that it continues to fall. Of course, if the price of Ether (the original token to the Ethereum blockchain) starts to rise again, then these prospects could improve. However, predicting the future price of ether is complex. Furthermore, the fund’s cost ratio is quite high at 2.5% per annum, which should give investors an even bigger break before investing in the Grayscale Ethereum Trust.