Only a day ago, the price of Ethereum surpassed the $3k mark. Over the last week, the value of the market’s largest alt increased by 21%. At the time of publication, its explicit value was $3142.86. The recent rise in cryptocurrency prices has reintroduced institutional products such as private investment funds into the spotlight.
Institutional investors typically use funds like Grayscale’s ETHE and GBTC to protect their portfolios from the volatility and risk of the cryptocurrency market. It goes without saying that changes in institutional demand have an impact on how the crypto market performs as a whole.
For quite some time now, Ethereum’s RoI has outperformed ETHE’s. In the monthly, YTD, and yearly time frames, the alt’s price increased by 46.34 percent, 660.99 percent, and 329.94 percent, respectively. ETHE’s surges, on the other hand, were limited to 19.6 percent, 77.55 percent, and 131.7 percent over the same timeframes.
Furthermore, as shown in the chart above, ETHE’s premium has plummeted since the beginning of the year. At this point, it is important to note that the premium is determined by market buyers and sellers, not by the trust.
ETHE’s premium stood at a massive 2513.86 percent in mid-December last year, but it reflected a negative value of 4.04 percent while writing. This essentially implies that institutional interest is gradually dwindling.
The Grayscale Ethereum fund’s AUM has decreased over the last few months. The fund’s assets are currently worth $9 billion, down from $13 billion in mid-May. Furthermore, as shown in the chart below, trust outflows outnumbered trust inflows by a wide margin.
The daily volume, on the other hand, has recently begun to pick up. By mid-July, the reading of this metric was typically in the $60m to $90m range. At the time of writing, it was well over $200 million.
Looking at the fund’s performance over the last few months, as well as the independent rallies that ETH has seen recently, it is possible to conclude that the negative premium is not necessarily indicative of ETH’s low price sentiment. For the time being, ETH’s bullish momentum is gaining traction, and regardless of how this fund performs, a rally can be expected in the coming weeks.