Shares in fund manager Grayscale Investments’ Ethereum Trust plummeted by 50% this past fortnight, despite Ethereum rallying by 75% over the same period.
ETHE shares represent 0.09620794 of an Ether each and are currently trading for $13.80 — roughly a 21% premium over the spot price of ETH.
Grayscale’s ETHE shares have been on a roller coaster ride, surging around 500% from $4.20 at the start of October, before topping out at $25 on Dec. 22. The shares have since plummeted by 50%, posting a local low of $12 on Jan. 5.
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ETHE 12-month price chart: TradingView
Joshua Frank, the CEO of crypto data aggregator TheTie, took to Twitter to offer a theory explaining the unusual price action.
Frank argued that institutional arbitrage may be fueling Ether’s recent gains, speculating that investors are buying ETH to close out loans used to purchase shares in Grayscale’s Ethereum Trust.
He suggested that many Ethereum Trust investors borrowed Ethereum at an annual
