While the remarkable rally in Bitcoin has led to breathless speculation about its long term price, the recent rally in Grayscale Ethereum Trust (ETH) (OTCMKTS:ETHE), the world’s second-biggest cryptocurrency, has gone a bit under the radar.
The rally in Ethereum has also come as a boon for Grayscale Ethereum Trust (ETHE), which saw its stock soar by as much as 17% on Tuesday this week.
What to Watch
The underlying asset in that fund is made up of Ethereum tokens and hence, the rally in Grayscale Ethereum Trust (ETH) (OTCMKTS:ETHE) is understandable.
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In addition to that, it is also necessary to point out that an investment in the trust allows investors the easiest way to get some exposure to Ethereum. That is also a significant factor to be considered.
On Tuesday, the Ethereum token rallied strongly and eventually hit $1400 per token, which is a level that was last season back in 2018. The token is now at a stage from which it needs to rally by around 1% to hit its all-time highs. In such a situation, it is not entirely surprising that the ETHE stock is soaring.
At the end of the day, the fund is made up of Ethereum tokens. That being said, there are some other things that investors need to keep in mind.
When the price of each share is pegged to that of Ethereum tokens, then each ETHE stock is worth $12.15 worth of Ether per share. Considering the fact that the token soared in price on Tuesday, the total holdings in the fund have also experienced a considerable rise in value. However, the stock is trading at $17 a share, which clearly shows that it is overvalued.
In other words, it is better to invest in Ethereum directly than to buy a share in ETHE. If this continues then the stock is going to stay overvalued but at the same time, the convenience of staying invested in Ethereum through owning a stock cannot be discounted.
Disclaimer: We hold no position in ETHE stock.