Grayscale Splits Ethereum Stock Worth $1.6 Billion, Making It Cheaper to Buy

In letter

  • Grayscale splits the shares in the Grayscale Ethereum Trust into nine parts.
  • This makes individual shares in the trust cheaper.
  • This does not affect the total value of the fund.

Grayscale Investments announced today that it is splitting the stock of its Grayscale Ethereum Trust, which is likely to make it more affordable for retail investors who are priced by the boom in the cryptocurrency market.

On December 14th, Grayscale will split the shares of the trust, which has $ 1.6 billion in assets under management, 9 to 1. Anyone who currently owns shares in Grayscale will receive 8 additional shares.

This will lower the price of each stock but will not affect the overall value of the fund.

The Grayscale Ethereum Trust is the closest thing to a fund traded by Bitcoin Exchange. The listed fund represents shares in a pool of funds from private investors that Grayscale used to buy Ethereum, the second largest cryptocurrency by market capitalization.

The share price of the Grayscale Ethereum Trust, which is only a fraction of the price of Ethereum (plus a huge premium stemming from Grayscale’s management fees), has risen from $ 60 per share this year to its current price of $ 109.

There seem to be two reasons for the increase:

First, the price of Ethereum has soared from around $ 340 in early October to highs of $ 635, according to CoinMarketCap. Second, Grayscale bought a whole lot of Ethereum this year, which means that every share contains more ETH.

So if the price of ETH continues to rise, smaller fish (so-called private investors) may not be able to afford to invest in the fund.

Grayscale has previously split stocks. In January 2018, when Bitcoin was on the downside (who knew then?). Grayscale split its stock 91 to 1, which means investors would get an additional 90 shares. At the time, Grayscale was worth $ 3.19 billion. Now it has a market cap of $ 12.8 billion.

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