Grayscale Ethereum Trust (OTCQX: ETHE) is a way to play moves in the world’s second largest digital currency. According to Grayscale, the Trust is solely and passively invested in Ethereum (ETH-USD), allowing investors to Gain exposure to ETH in value form while avoiding the challenges of buying, storing, and holding ETH directly.
ETHE, with $3.6B in assets, comes with a hefty 2.5% annual fee. The product is trading at a steep discount to the value of its holdings per share, according to Grayscale. The fund is designed to track the CoinDesk Ether price index. This is not your typical publicly traded product – you can learn more about the details of ETHE here.
ETHE trades at a discount to the value of holdings per share, per grayscale
Know what you own and why you own it
Wild moves in the wildest markets
Crypto finally tanked after a prolonged consolidation from mid-May to early June. Four weeks of sideways price action felt like an eternity for crypto holders and those who play in the typically high volatility of the space. Ultimately, the downtrend continued. On June 10, both Bitcoin (BTC-USD) and Ether plummeted to lows not seen since last year. Many risky assets suffered heavy losses that Friday following the double whammy of a worrying US CPI report and after white-hot inflation expectations for 5-10 years inside the University’s Consumer Sentiment survey. from Michigan. That forced the Fed to raise the rate 75 basis points this week.
Then came the weekend. As stock and bond traders likely took a few drinks, still-open crypto markets posted new lows. The news that Celsius would no longer allow withdrawals led to more crypto losses. Then came the news that Binance would do the same. On a broader level, announcements of job cuts from major crypto firms like Coinbase (COIN), Crypto.com, and BlockFi demonstrated just how much turmoil is going on right now in the lands of crypto and DeFi. Are we on the verge of another so-called crypto winter? Let’s look at some charts before turning bearish.
Crypto Price Action Analysis
I like to first review what is happening with the total crypto market capitalization, according to Tradingview.com. It has sunk to the lowest value since January 2021. Now below $900 billion in market cap, a more than 70% cut from November’s all-time high above $3 trillion last year is certainly unsettling for hodlers.
Total Crypto Market Cap Falls Below $1 Trillion, a 17-Month Low
The technical take
Ether itself is back to where it was trading at the start of 2021. That was an incredibly bullish moment of sentiment. It was also when the prices rose from around $600 to $1200 in a short time. ETH then consolidated for several weeks before taking a higher leg. The $950-$1000 area could be supportive, but it is not a strong demand area. Ultimately, a move towards $650 could be on the cards – that’s the peak of late 2020. Once support was broken just above $1,700, all hell broke loose.
Ethereum – Weak support here, higher demand likely near $650. Upside resistance at $1700.
The bottom line
ETHE is a complicated way to play moves on ETH-USD. It is an expensive product that has important stipulations. I would advise caution when trading and holding it. You could simply buy and sell Ether on the more established exchanges but expect volatility. As a technical analyst, there could be more downside if the $1,000 is broken. The next support is at $650. On the upside, $1,700-$1,740 will be significant resistance. Keep those points in mind when trading ETHE.