ETH Investors Are Buying Ether With 750% Premium: Is This Good?

The demand for Ethereum is surging and as we can see from the latest updates, ETH investors are buying the cryptocurrency with 750% premiums on the Grayscale Investment Trust.

Despite the ongoing dip on the markets as of June 12, the demand for institutionally-aimed ETH products has increased multifold and investors are already paying huge premiums to institutional cryptocurrency firms for maximum Ether exposure.

Now, what does this all mean in the ETH news today?

Well, the surge does not necessarily mean that Ethereum is facing groundbreaking institutional demand, as one analyst notes. In fact, the amount of ETH investors and Ether sold by the Grayscale Investment Trust is now pegged at a 750% premium which is quite bulky. The data comes from the crypto research firm Messari.

Grayscale Ethereum Trust (ETHE) investors are currently paying a 750% premium for $ETH exposure

📈 Secondary market investors are buying ETHE's underlying ETH at an implied price of $2,095

🤯 46% above ETH's all-time high

Full analysis: https://t.co/UCcATpS0uT pic.twitter.com/SAiYQf3w9M

— Messari (@MessariCrypto) June 11, 2020

Additionally, we can see that secondary market ETH investors are buying ETHE, a Grayscale product which represents a certain amount of underlying ETH at an “implied” price of $2,095. This figure is over 45% higher than ETH’s all-time high of $1,490 which was posted in January 2018.

If we take a look at these metrics, we can see that investors are seeking massive exposure with Ethereum. Some of the possible catalysts, as we talked before, include the shift to ETH 2.0 which will move the protocol to a staking consensus which could (theoretically) act as a passive investment for some people.

However, Ryan Watkins from Messari thinks that the premiums are inflated because of simple economic factors and less Ethereum fundamentals. As he said, ETH shares are availably only to “accredited” investors – which means individuals and businesses with a certain and higher net worth. He also spoke about the “Rule 144 exemption” and said:

Initial ETHE shares are only available to accredited investors and can be created either using cash or cryptocurrency ("in-kind").

A “Rule 144 exemption” allows these initial investors to sell shares to the public on secondary markets after a 12-month holding period.

— Ryan Watkins (@RyanWatkins_) June 11, 2020

Basically, secondary market ETH investors can “push” ETHE prices over the value because of the fact that there are a lot of buyers and a few sellers. This creates a major price dislocation for ETH too, with ETHE being a misprepresentation of the actual Ether prices.

“Since no new shares are being created, no new cryptocurrency is actually going into the trust, creating a premium to the underlying,” Watkins noted.

The Bitcoin price news and Ethereum updates today show a slight price recovery compared to yesterday’s levels.