To gain exposure to crypto, specifically Ethereum in my retirement account, I own some ETHE, which is a Grayscale Trust Fund. I read their terms and filings and financials at the time, and bought close to NAV. I understand crypto at a technical level and have confidence in Ethereum itself, and also own a number of ETH, while developing for the platform. I also understand that the entire industry is extremely volatile right now. Hell, the old school, traditional markets are just as volatile. I've 401Ks that are down over 32% now, managed by professional fund managers. So, I get that the world is on fire.
So the thought in mind is:
- If Grayscale has committed fraud, then they have spent, encumbered, or otherwise do not hold our underlying assets (ETHE or GBTC for the Bitcoin fans). This would explain the massive +52% discounts right now. People are bailing out regardless of losses, willing to take more than a 50% loss, right?
- However, if Grayscale has not committed fraud and our underlying assets are secure, safe, and unencumbered (they've loaned none out, have no liabilities, debtors who can take it), then what else explains this wild discount to NAV?
- The trend is concerning. I've seen people say that REITs, and other trust funds like these cannot go to -99% discount to NAV, but it's not slowing down, steadily falling every day. Could it go to zero even if they have the crypto? What would make it return to NAV? Who besides Grayscale is coming out ahead with these trusts? (They're bleeding 2.5% in “management” fees NOT on the valuation of the shares, but the valuation of the proclaimed assets)
Leave a Reply