Ethereum (ETH) currently has a spot price near $230, and this is up significantly from its March low of just below $100. However, the rally on the Ethereum (ETH) spot market pales in comparison to the Grayscale Ether Trust market, where investors are currently buying Ethereum (ETH) for roughly 500-1,000% above its spot value. This translates to Ethereum (ETH) prices of $2,000-$3,000, which is well above Ethereum’s (ETH) all-time high.
The Grayscale Ether Trust is essentially a way for institutional investors to buy Ethereum (ETH), without having to deal with managing their own coins. Apparently the reason that it is seeing such an astonishing spike above spot value is because some big institutional investors are buying up lots of Ethereum (ETH) in anticipation of the launch of Ethereum 2.0.
However, this tremendous spike above spot value also indicates that the Grayscale Ether Trust lacks liquidity and is fundamentally disconnected from the spot market. If the Grayscale Ether Trust could easily be converted to and from actual Ethereum (ETH), then the price would go back towards spot value.
The reason it is not possible for the Grayscale Ether Trust to be easily converted to and from regular Ethereum (ETH) is that the coins held in the trust need to be properly custodied. That being said, this does not change the fact that the Grayscale Ether Trust is inducing artificially high Ethereum (ETH) prices, which is something that Grayscale could solve by adding more liquidity, but apparently they are choosing not to.
Zooming out, the surge in Ethereum’s (ETH) price on the Grayscale Ether Trust to beyond all-time highs can be considered a bullish sign, since it means institutional investors are buying up lots of contracts in expectation of a big Ethereum (ETH) rally. Likewise, the premium for the Grayscale Bitcoin Trust has surged to well over $1,000, indicating institutional bullishness in the Bitcoin (BTC) market as well.