Grayscale Ethereum Inflows Up Again, Firm Calls ETH Valuation Methods 'Opaque'
Major US-based crypto investment company Grayscale's ethereum (ETH) inflows increased yesterday, while the firm claims the methodology for valuing this asset "is opaque and changing."
Grayscale Ethereum Trust (GETH) got 'fatter' by another batch of the world's second coin by market capitalization on February 3, adding ETH 47,000 (USD 77m) - making it the total of ETH 3m (USD 4.93bn).
ETH inflows surpassed those of bitcoin (BTC) by a wide margin on both of these days. However, Grayscale Bitcoin Trust is more than five times larger than GETH.
Meanwhile, according to Grayscale, while "the network has matured into a robust settlement layer for billions of dollars of peer-to-peer value transfer, investors often find it difficult to identify the investment case" and how to value the asset.
As many have pointed out before, while bitcoin, at this stage, is mostly known as digital gold, ETH's narrative is less clear, with Grayscale's report looking into ETH as money, a consumable commodity, and an interest-bearing asset. Among the conclusions that the report made is that ETH is in many ways functioning as "new age digital money" and its utility drives its use as a monetary good on the network.
But given that Ethereum is younger than Bitcoin, with its protocol undergoing "significant transformations," Grayscale finds that,
"the methodology for valuing the underlying asset, Ether, is opaque and changing. Considering Ether as money, as a consumable commodity, or as an interest-bearing asset allows investors to account for a range of possible outcomes when assigning a fair value to the asset."
What could be a "catalyst" for the value of ETH are:
- migrating to Ethereum 2.0, giving the investors the ability to use ETH as a yield-generating asset by staking their holdings;
- EIP-1559, instituting a consumption mechanism that should serve as a positive feedback loop for ether’s price, converting ETH into a consumable commodity through token burning, as well as supporting ETH as the native asset of the protocol, unremovable from the ecosystem.
As reported, Ethereum 2.0 Phase 0, the first of three phases, went live in December 2020.
Meanwhile, Ethereum improvement proposal (EIP) 1559 ran into some obstacles recently, as a number of miners joined to try and stop it from being implemented.
In either case, ETH keeps reaching new all time-highs, with another one surpassed earlier today (USD 1,688). At 11:29 UTC, it's trading at USD 1,639, having gone up 5% in a day and 31% in a week. The peak comes ahead of ethereum futures launch on the Chicago Mercantile Exchange next week.
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