The ETHE premium, like the GBTC premium, can be a signal of crypto sentiment (and more-so with ETHE, ETH sentiment). However, it can also signal that ETHE is overbought.

You can see that the ETHE chart above starts out with a high premium in 2019 upon launch that is not an indicator of sentiment, it is just overpriced ETHE finding a fair price according to the market.

However, we can see recent price action driving the ETHE premium up. That divergence between the market price of ETH and the price of the ETHE trust is in my opinion a bullish indicator that denotes both bullish sentiment on ETH and crypto in general (and honestly, because it is ETH, on alts)… and also it denotes an overbought status for ETHE.

Today ETHE is trading at about $83, but an underlying share is worth about $22 (Friday when the screenshot was taken the split was $77.91 to $20.77… it has “diverged” further!… which is according to my theory “bullish.”)

Why would you pay $83 for $22 worth of ETH!? Well, you wouldn’t long term, but short term you might because you think sentiment will get more bullish and price and premium will continue to increase (or if we are really lucky, continue to diverge as well).

The further we go, the more of a risky bet we take as a buyer or HODL’r. However, these bets have paid off in the past with GBTC and ETCG, so there is some logic here.

So, do you know what you are buying and do you have a game plan? Ask yourself that.

Personal investing / trading logic aside, I find the divergence and convergence of the Greyscale trusts to be an excellent indicator of sentiment, and right sentiment is clearly bullish. And thus the point of the article concludes 🙂

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What do you think?

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