Investors Are Paying $2400 Per ETH Via Grayscale's Ether Trust

Shares in Grayscale Investments’ Ethereum Investment Trust, or ETHE, have been trading at a 750% premium over the market rate of their underlying asset on the secondary markets, according to data published by crypto analysis firm Messari.

The premium on Grascale’s fund has aggressively widened since the start of the year, with ETHE shares trading at 220% the spot price of Ether (ETH) in February.

The trust offers exposure to ETH without investors needing to handle or custody cryptocurrency and is favored among institutional investors.

ETHE premium widens

ETHE shares have recently traded for as high as $2,905 per ETH — 46% above Ether’s all-time price highs in the spot markets. Since then, the nominal price of ETH bought through the trust has dropped 20% to roughly $2,400.

The premium on the shares over Ethereum has continued to widen in recent months, with ETHE trading for 550% above spot prices in early April.

The widening spread appears to have been driven by increasing institutional demand for Ether ahead of the ETH 2.0 rollout, with Grayscale purchasing $110 million worth ETH in 2020 so far.

In a recent interview, Grayscale’s director of investor relations, Ray Sharif-Askary, noted that 38% of the firm's clients are currently exposed to more than one crypto asset, up from 9% one year ago.

Grayscale BTC accumulation outpaces supply

Grayscale’s Bitcoin Investment trust has aggressively ramped up accumulation this year, going from buying at a rate equal to 33% of new Bitcoin (BTC) being mined in the first quarter to absorbing coins at the 1.5 times the speed they are minted post-halving.

Since the block reward halving, the trust has already purchased an additional 19,000 Bitcoins — nearly $178.6 million worth of BTC accumulation in roughly five weeks.