The Grayscale Ethereum Trust Discount Hits Lowest Level Since November 2023
The discount on the Grayscale Ethereum Trust has dropped to -20%, its lowest level since November 2023. This decline in the discount is due to decreasing optimism regarding the approval of a spot Ethereum ETF by May.
If a spot Ethereum ETF were to be approved, the Grayscale Trust would be converted into one, similar to what happened with its Bitcoin Trust. This conversion would allow holders to redeem the underlying ether and essentially eliminate the discount. However, the decreasing discount suggests that traders do not expect an approval or conversion to happen anytime soon.
Industry Sentiment and Analyst Predictions
This sentiment aligns with the general industry consensus, as analysts have largely abandoned hope for an ETF approval by May. Previously optimistic analysts have become more pessimistic in recent months, with Bloomberg ETF analysts lowering their chances from 70% to 30%. This adjustment reflects current prediction markets.
Bernstein analysts Gautam Chhugani and Mahika Sapra stated that market consensus on the Ethereum ETF approval has turned negative, resulting in a greater correction for ETH compared to Bitcoin. They note that many are looking at the May 23 approval date as critical but with diminished hope. Despite this, the analysts still believe there is a 50% chance of a spot Ethereum ETF being approved this year.
The analysts also anticipate continued efforts from the industry to push for an ETH ETF approval and encourage the SEC to provide solid reasoning if denying it. They point to the success of Blackrock and Fidelity with their Bitcoin ETFs and emphasize that fighting for an ETH ETF is worthwhile for the industry.
Delayed Approval and Potential Benefits
While approval by May seems unlikely, not everyone views this as a negative outcome. Bitwise CIO Matt Hougan expressed his hope that the ETFs are not approved by May. He argues that Wall Street needs time to fully digest the bitcoin ETFs before being ready to focus on a new one. Hougan believes that a delayed approval could potentially attract even more assets.
Hot Take: The Grayscale Ethereum Trust Discount at Its Lowest Level in Years
The Grayscale Ethereum Trust discount has reached its lowest point since November 2023, standing at -20%. This decline in the discount reflects decreasing optimism for a spot Ethereum ETF approval by May. Traders and analysts alike have grown more pessimistic about the likelihood of an approval, with Bloomberg analysts lowering their chances from 70% to 30%. Despite this, there is still a 50% chance of a spot Ethereum ETF being approved this year according to Bernstein analysts. While some may see the delay in approval as negative, others believe it allows Wall Street to fully absorb bitcoin ETFs before focusing on new opportunities. Overall, the industry continues to push for an ETH ETF approval and remains hopeful for future developments.
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