Everyone knows the Grayscale Bitcoin Trust (GBTC) which has been selling shares of its Bitcoin-backed fund since 2013 and has recently exploded as the price of Bitcoin has eclipsed its 2017 ATH of $20,000. But did you know Grayscale has another crypto-backed fund for Ethereum as well?

Grayscale: ETHE

As it turns out, this fund, among others, is one of the most popular funds for institutional and traditional investors to gain exposure to Ethereum through traditional means, e.g. banks and brokerages. With GBTC seeing a massive increase of quarterly inflows over the past year or so, demand for other Grayscale crypto products looks very promising. Why exactly? Because Grayscale crypto funds are crypto-backed, meaning they buy actual Bitcoin proportionate to the amount of GBTC shares they offer to sell to investors. This huge GBTC demand has led to Grayscale buying hundreds of millions of dollars of Bitcoin in 2020 alone. If Ethereum continues to see an increase in institutional and investor interest through Grayscale, then we should likely expect Grayscale to accelerate its fund-buying of hundreds of millions of more ETH over the short-medium term.

Q3 2020 Performance

During Q3 2020, Grayscale raised over $1 billion into its crypto investment funds, marking the largest capital inflow in a single quarter in Grayscale history. Over $2.4 billion of investments into Grayscale have been recorded YTD, more than double the $1.2 billion cumulative Grayscale inflow from 2013-2019.

According to Grayscale, Q3 2020 marked the largest investment into the Ethereum Trust with over $200 million in inflows. Q3 weekly inflows into the Grayscale Ethereum Trust averaged over $15 million compared to over $55 million for GBTC. The majority of investment continued to come from institutional investors, accounting for 81% of investment in Q3 2020. Grayscale has continued to accumulate Ethereum with current holdings at nearly $2 billion in valuation. Grayscale's Ethereum AUM is valued at $1.94, corresponding to just under 3 million ETH in Grayscale vaults and nearly 350,000 ETH purchased this past month alone.

Per Grayscale, they "announced that it would be carrying out a 9-for-1 split of the Ethereum Trust on the 14th. Shareholders went on to successfully receive 8 additional shares on the 17th of December. The move was meant to increase the liquidity of the Ethereum Trust (ETHE) as well as make it more affordable. Share splits are often bullish in the sense that they are done to meet the demand of investors."

I think that Grayscale will most likely continue buying Ethereum similar to how they have gobbled up Bitcoin in 2020.

Rise of Ethereum-only Investors

Further, Grayscale Managing Director Michael Sonnenshein said 2020 has "seen a significant rise in “Ethereum only” investors," emphasizing ETH's growing appeal beyond the development community into the investment sector. “Over the course of 2020 we are seeing a new group of investors who are Ethereum first and in some cases Ethereum only. There’s a growing conviction around Ethereum as an asset class.” A major component of Ethereum's broad appeal is the explosion of DeFi applications being built on top of the ETH blockchain.

Speaking to the future of Ethereum, Sonnenshein said ETH “has along the same lines of the staying power Bitcoin has.”

ETHE Specs:

Annual Fee: 2.5% AUM: $1.91 billion 52 Wk Range: $2.68 - $28.84

ETHE Performance:

1 Month: 131.76%

3 Month: 281.79%

YTD: 604.27%

1 Year: 466.72%

[](Buy Ethereum here.)

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