Grayscale Ethereum Mini Trust, Key Spinoff Concerns Addressed

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As a seasoned researcher with extensive experience in analyzing and reporting on the crypto market, I have closely followed Grayscale’s announcement of the fee slash for its Ethereum Trust spinoff to an Ethereum Mini Trust ETF. The introduction of this new product has generated quite a buzz in the crypto community, and I can understand why – it’s a significant shift that warrants closer scrutiny.

Following Grayscale’s announcement of reduced fees for its Ethereum Trust spinoff named Ethereum Mini Trust ETF, there is growing interest among crypto community members to learn more about this novel product. Many are expressing apprehension due to its being a fresh development in the ETF space.

Mechanics For Grayscale Mini Trusts

James Seyffart, a seasoned Bloomberg ETF Analyst, elucidated the workings of Grayscale’s latest offering. He highlighted that this new product would function similarly to both the Grayscale Bitcoin Trust and BTC Mini Trust ETFs. In terms of share ownership, holding 1,000 shares of ETHE would translate to receiving an equivalent number of mini ETH shares. However, from a value perspective, there is a notable distinction.

An individual holding $1,000 worth of ETHE or GBTC will see their balance reduced to approximately $900 in their original investment, while gaining around $100 in value in newly formed mini ETFs following the spinoff events.

As an analyst, I’m here to provide some clarity on the anticipated spinoff for Grayscale’s Ethereum Trust ($ETHE) and Ethereum Classic Trust ($ETH). I’ve been fielding numerous queries regarding this topic. The essential workings of this spinoff will mirror that of Grayscale’s Bitcoin Trust ($GBTC) and Bitcoin Cash Trust ($BCH) spinoffs.
— James Seyffart (@JSeyff) July 19, 2024

Initially set for July 18, the record date for launching and distributing shares of the new Grayscale Ethereum Mini Trust was later changed to July 23. The planned spinoff for GBTC into the BTC Trust remains scheduled for July 31 as originally announced.

Grayscale BTC And ETH Mini Trusts Share Distribution

According to Seyffart, ownership of shares is a prerequisite for their distribution as determined by the criteria he set forth. He explained that this rule was the reason for the decrease in ETHE’s trading price on Thursday upon resumption of trading. Seyffart anticipates that GBTC will experience a similar trend when its spin-off occurs approximately two weeks from now.

Based on the ETF Analyst’s assessment, ETHE currently holds a market worth of $29. In theory, the price you pay for each ETH share in the new fund would be significantly lower than what you originally paid due to receiving an equal number of shares but with only one-tenth of the value. Approximately $2-$3 per share is the estimated range.

As a crypto investor, I would interpret that statement as follows: The speaker is making an analogy between Bitcoin and Grayscale Bitcoin Trust (GBTC). According to his assessment, the price of GBTC should hover around $5 to $6 per share based on current market conditions for Bitcoin. Therefore, if Bitcoin’s value is around $59,000 at the moment, we would expect GBTC shares to trade within that range.

Currently, the sponsor fee for Grayscale Bitcoin Mini Trust and Ethereum Mini Trust is set at a low cost of 0.15%. Consequently, these are the most affordably priced crypto ETFs available in the market so far.

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2024-07-19 21:50