Read on Twitter
1/
A large number of Grayscale's ETHE investors via private placements received their shares today.
ETH's run the last few days might be in large part due to those institutions buying ETH to cover their loans. https://twitter.com/Joshua_Frank_/status/1346121426340896770
A large number of Grayscale's ETHE investors via private placements received their shares today.
ETH's run the last few days might be in large part due to those institutions buying ETH to cover their loans. https://twitter.com/Joshua_Frank_/status/1346121426340896770
2/
ETHE was trading at a 100%+ premium to NAV up until Friday, so if you were an institution you could buy at NAV and borrow ETH for ~8%/annum. So institutions and accredited investors borrowed ETH and invested that ETH in-kind in ETHE.
ETHE was trading at a 100%+ premium to NAV up until Friday, so if you were an institution you could buy at NAV and borrow ETH for ~8%/annum. So institutions and accredited investors borrowed ETH and invested that ETH in-kind in ETHE.
3/
While there is a lot of talk about flows into Grayscale being super bullish, the premium is likely the primary driver. (And also the reason Bitwise raked in $400M in Q4).
The spread between the premium and borrow rate - is a massive incentive to borrow and invest in ETPs
While there is a lot of talk about flows into Grayscale being super bullish, the premium is likely the primary driver. (And also the reason Bitwise raked in $400M in Q4).
The spread between the premium and borrow rate - is a massive incentive to borrow and invest in ETPs
4/
ETHE initially had a 12 month lock-up, but that lock-up was reduced to 6 months. Many investors who were part of that initial 12 month lock-up receive their ETHE shares this week.
Because many borrowed ETH, they have to buy ETH spot to pay back lenders to close their trade.
ETHE initially had a 12 month lock-up, but that lock-up was reduced to 6 months. Many investors who were part of that initial 12 month lock-up receive their ETHE shares this week.
Because many borrowed ETH, they have to buy ETH spot to pay back lenders to close their trade.
5/
This is likely a large part of the reason ETH had a massive run-up this weekend, why ETHE fell today (despite ETH's massive run this weekend), and why the premium on ETHE has fallen so drastically.
This is likely a large part of the reason ETH had a massive run-up this weekend, why ETHE fell today (despite ETH's massive run this weekend), and why the premium on ETHE has fallen so drastically.
6/
Doesn't mean that this movement was still bullish for ETH and I wouldn't be surprised to see the ETHE premium run back up again. Just lots of ETH buying pressure and ETHE selling pressure because of the lock-up ending.
Doesn't mean that this movement was still bullish for ETH and I wouldn't be surprised to see the ETHE premium run back up again. Just lots of ETH buying pressure and ETHE selling pressure because of the lock-up ending.
