Jeff Fawkes is a seasoned investment professional and a crypto analyst. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.
Ethereum has managed to get a sizable price boost as JPMorgan and Grayscale reportedly make huge business with the cryptocurrency. But it has become known that Grayscale investors buy Ethereum coins at more than 300% premium.
Recently, the Ethereum price gained another 12% in value, reaching the $275 level. The bulls are ruling the market, we can expect the price to rise to $292 or $300 per Aayush Jindal. Kraken charts show that Ethereum has an hourly support level at $268. The major resistance level is at $288. In case the ETH goes above $288 level, then the probability is high that it will reach $300 in no time.
In case the price moves downside, the downside trend may lead it to $265. The major resistance level is $275, while the major support level nears $268. Other technical indicators show the signs of positive trendline for Ethereum. The Bitcoin price shows low volatility.
JPMorgan News and Grayscale Deal Catch Attention, Boost Price
JPMorgan reportedly wants to use ConsenSys ecosystem to build their inner network. The news is only rumors but they already made Ethereum boost up its price action. Now, many market analysts predict that Ethereum could ‘test’ the $300 price level. Ethereum is on the solid rise among Grayscale investors too. But there’s a trick.
Grayscale’s standard underlying asset volume is 0.0947 ETH per share. It means one share represents $24,13 in ETH. On the classic spot market, you buy 1/10 of the coin for a similar price.
However, Grayscale’s own price per share index shows that their share is worth $99,50. This means that Grayscale investors buy Ethereum coins with more than 300% premium. Some of the Twitter users wonder how such a scheme is even possible.
— Charlie Bilello (@charliebilello) February 12, 2020
The shares could be used to avoid taxation, according to commentators. Some of them made claims that investing money in such a venture is the only way to move cash from the IRA/401k saving plans, because of tax benefits. However, a quick Google search shows that the owners of IRA or 401k plans have to pay only 10% in taxes during withdrawal.
This is much less than 300%, so the ‘avoid taxation’ theory is not a fit. The questionable deal, however, makes Grayscale’s investors pay more than $990 per one ETH.
Business Logic Is Not Always Clearly Visible
The logic behind the share is that it has a separate evaluation in the U.S. dollar. This means that they create a bait for longtime investors who will buy the shares for Ethereum and sell them later for the U.S. dollar, with profits. Thus, this scheme is possibly a huge profit for everyone, but needs clearance.
The Ethereum team was practicing decentralized finance long enough to jump onto the new levels. One business giant after another showing interest in Ethereum. It looks like the approach of the no-return point. However, the Grayscale deal seems the best one from a profitability perspective, making both the inventors and the investors of the scheme somewhat rich, out of nothing special but properly placed investment.