Updated

Déjà vu in Grayscale's Cryptocurrency Trust

GBTC (Grayscale Bitcoin trust) is the only form of pure exposure to Bitcoin for stock trading accounts. The biggest problem GBTC had in its inception and during the bull market of 2016 - 2017 was how many Bitcoins were held in the trust in relation to its stock price. At the height of the crypto rally in 2017, GBTC was trading in the vicinity of a 100%+ premium to Bitcoin. That means buying $10,000 worth of GBTC really only meant owning the equivalent of .5 Bitcoin. Eventually the premium dwindled down to about 20%, which makes sense since traditional trading and retirement accounts (IRAs) now have access to BTC performance. In June 2019, Grayscale came out with ETHE (chart above), the GBTC equivalent for Ethereum. At one point I believe it was trading at a staggering ~400% premium to Ethereum (June 2020). We are seeing something VERY similar happening with ETHE. The KEY THING here is the ETH holdings per share (you could see that below).

GBTC closed on Friday at $13.58 per share, while the holdings per share closed at $11.25:
Market Price per Share*
At close as of 08/21/2020
$13.58
DAY CHANGE
-4.10%

Bitcoin Holdings per Share**
At close as of 08/21/2020
$11.25
DAY CHANGE
-0.18%

Source:
[url=grayscale.co/bitcoin-investment-trust/]grayscale.co/bitcoin-investment-trust/

Here is where we're at today for ETHE:

Market Price per Share*
At close as of 08/21/2020
$67.90
DAY CHANGE
8.81%

ETH Holdings per Share**
At close as of 08/21/2020
$38.17
DAY CHANGE
-0.42%

Source
https://grayscale.co/ethereum-trust/#market-performance

At some point ETHE is likely to trade at a small premium to Ethereum (probably similar to GBTC, which is about 20%).

I think we are getting very close to that point. I expect the premium to erode to something reasonable, somewhere between $35 - $42 per share.

This is the zone where I would get a buy signal. Right now it's nearly double that.

Note

A little bit more than a week has passed and the price of ETHE has gone down 17% while the price of Ethereum has gone UP about 15-20% in the SAME PERIOD. This is actually good news for people interested in the product, not bad news. We are getting a tighter premium which is what makes the product desirable.

At a current price of 55.75 and updated ETH holdings of $40.10, we're looking at a 39% premium vs the 79% just 9 days ago. Already a significant improvement.

I am stilling looking for that $40 price range to hit in ETHE and no more than a 20-25% premium (As I've stated before I think a 20% premium is justified given the fact that it's the ONLY way to get exposure to Ether in the form of public equity (stock)).

Note

Time to watch more closely as ETHE is now in the 40 handle and getting closer to target:

Current holdings per share still stand at a very high 53% premium based on below... PATIENCE:
Market Price per Share*
At close as of 09/08/2020
$49.25
DAY CHANGE
-11.58%
ETH Holdings per Share**
At close as of 09/08/2020
$31.97
DAY CHANGE
-11.24%

Note

Tagged 43 this morning and bounced. Currently at about a 28% premium to Eth which I believe is the lowest it's been since I started following the stock. Has some squeeze potential now:

If there was ever a time to consider going long, now could be a decent time to buy some.

Note

It's time:

IMO price will either rip shortly or flush down as a false continuation and reverse. Just keep one thing in mind. This is a super high risk stock not because of ether itself, but because of the diverging performance lately. Timing is everything is an understatement with a garbage product like this, because you're battling the product itself rather than just the underlying asset. It's hard enough to be right on the asset let alone the product that trades based on the asset. But we're in the buy zone now.

Note

We had the flush down as a potential false continuation as I suspected could happen:

I think there is a very reasonable probability ETHE bottoms around now

Note

Huge reversal off my blue level. Did anyone catch this? :)

Note

above 70 takes us to 78 then 89:

Note

Closed on Friday at my first target. Now looking for the next level. I'm still long a full position:

Note

Next target was hit:

Note

Retested 200 day and structure. Adjusted trailing stop below today's low. I still have a full position in the IRA:

Note

Back to new highs. Here's how I am monitoring it for profit taking. As long as price stays above these moving averages the stop should not be triggered:

Note

3X from entry:

Trade closed: target reached

Closing @ 175. Monster.

Holding spot ETH

Note

Deja vu round 2 ... now with Litecoin.. Much lower liquidity on this Grayscale product but can 4-5x. Should always hold the real thing but if you want to trade something in an IRA account.. this could be interesting here. High risk/high reward. Targeting mid 90s per share

Lanmar

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Lanmar