A [Legit] Billion Dollars Could be Funneling Into Ethereum Starting Today
Near term scenario for $ETH
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ETHE and Greyscale Trust Unlocking
There’s a going to be a large volume of ETHE, Greyscale Trust’s unlocking on January 5th, 2021.
ETHE are OTC shares that track the ETH market price, less fees and expense.
The equivalent of 1,200,000 ETH ($1.3 Billion USD) is going to become available for sale by investors whose locking period has expired.
“This is going to be bad”
Well, there is a scenario where it could be VERY good for Ethereum in the case we are going to cover.
I came across a great thread on this topic from Brother Muozone. After you finish this article, I suggest you take a quick review of his tweet thread.
What is the next move for ETHE sellers?
As Muozone points out, there are likely a few types of ETHE sellers. I’m not sure where he got the numbers here, but it makes some sense to me at a glance:
We’re not interested in predicting exact number or percentages of this unlocking, but I do believe we’re going to see hundreds of millions follow the path where outlining below.
What’s that path?
The simplest explanation: ETHE holders can now freely sell their ETHE at a premium on the OTC market and use those proceeds to buy real ETH cheaper.
And once they’re in ETH, they can generate much greater returns with their ETH than they can with the ETHE.
“How?”
DeFi.
Downstream to DeFi
Adding to Brother Muozone’s assessment, I’m looking at how it will affect the rest of the Ethereum blockchain space.
I think it’s fair to assume that ETHE holder understands the value proposition of Ethereum and watches the space closely.
If they’ve been paying a modicum of attention to what’s going on in Ethereum the past 6 months, they’re going to be VERY interested in DeFi.
It’s the decentralized finance subset of Ethereum projects that has grown 10X this year to an already astounding $23 Billion market cap.
Some of the activities that are enabled in DeFi
Lending
Borrowing
Synthetic Assets
Yield Farming
Leverage
Market Making
Buying Art
Directly Investing in new projects.
All of these capabilities are real and working right now in Defi and are generating APRs from 4.5% to 45% and beyond.
These financial instruments available are now mature and battle-tested enough to handle large influxes of digital assets.
Unlike the past, ETHE sellers can park their fresh ETH in a myriad of interest-bearing decentralized financial instruments.
Why would you keep an static ETHE asset, when you could convert that to ETH, which can be used to generate great yield in the DeFi space?
I have a hunch that locked up ETHE holders have been salivating to convert to ETH so that their ETH can be put to work earning yield.
What’s the Timing On This?
The unlocking is now.
I imagine we see some delay before funds really impact ETH.
Might be a delay from the sales to withdraw to bank accounts.
Then another delay of a few days to get that money from banks into crypto exchanges like Coinbase.
If this happens, expect a lot of DeFi projects to skyrocket.
Which Projects Are Going to Benefit in This Scenario?
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