Grayscale’s ETH ETF Could See $110M Outflows Daily
A recent report by Kaiko suggests that Grayscale’s upcoming spot Ether exchange-traded fund (ETF) could experience daily outflows averaging $110 million if it follows a similar trend to the company’s Bitcoin Trust. The approval of spot Ether ETFs by the U.S. Securities and Exchange Commission further fueled this projection.
Grayscale Bitcoin Trust Transition to ETF
The Grayscale Bitcoin Trust (GBTC) shifted from a closed-end fund to an ETF on January 11, leading to a 23% outflow of assets under management (AUM) in the first month, totaling $6.5 billion, as reported by Kaiko analysts on May 27. Grayscale’s Ether Trust (ETHE) currently holds an AUM of $11 billion, raising concerns of potential average daily outflows if it mirrors GBTC’s trend.
- If ETHE sees similar outflows as GBTC, daily outflows could hit $110 million
- This represents 30% of ETH’s average daily volume on Coinbase
- ETHE has traded at a discount of up to 26% to its net asset value (NAV) over the past three months
SEC’s Approval of Ethereum ETF
The U.S. Securities and Exchange Commission’s recent approval of spot Ether ETFs signaled a shift in how the agency views underlying assets, considering them as commodities rather than securities. This approval is expected to have positive implications for the regulation of similar tokens in the U.S., especially concerning trading, custody, and transfer.
- Last week, several issuers adjusted their filings to exclude staking, increasing the likelihood of ETF approval
- ETH’s regulatory status had started to create uncertainty, affecting the odds of approval
- Grayscale’s Ether Trust discount has narrowed since the SEC’s approval of spot Ether ETFs on May 23
Market Impact and Potential Outcomes
The market reactions to the news of potential ETF approvals for Ether have been mixed and varied. While some anticipate positive shifts in sentiment towards the asset, others remain cautious about the implications of daily outflows and market dynamics.
- GBTC’s outflows were balanced by inflows into other Bitcoin ETFs post-transition
- Inflows into Ether ETFs, even if initially disappointing, could be significant for market sentiment towards ETH
- Investors and analysts closely monitoring ETHE’s discount to NAV for potential trade opportunities
Conclusion
The approval of Grayscale’s spot Ether ETF and the subsequent projected outflows have sparked discussions and debates within the crypto market community. While the potential for daily $110 million outflows raises concerns, the shift towards viewing Ether as a commodity by regulatory bodies could pave the way for further acceptance and integration of digital assets into traditional financial systems.
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