Grayscale’s Ethereum ETF Faces Potential Outflows as Analysts Warn of $110 Million Daily Exit Average
Grayscale, a prominent institutional crypto investment firm, is set to launch an Ethereum exchange-traded fund (ETF). However, analysts caution that the impending ETF may see significant outflows. A recent report by analysis firm Kaiko highlights the potential challenges facing Grayscale’s Ethereum Trust (ETHE) ETF. Drawing parallels with the conversion of the Bitcoin Trust (GBTC) to an ETF in January, Kaiko predicts daily outflows averaging around $110 million. The data suggests that such outflows could impact ETHE’s assets under management (AUM) and daily trading volume.
Projected Outflows Based on Historical GBTC Data
- Grayscale’s Bitcoin Trust (GBTC) underwent a similar transition from a closed-end fund to an ETF in January.
- Following the conversion, GBTC experienced outflows amounting to 23% of its AUM, totaling $6.5 billion.
- Analysts anticipate a comparable trend for Grayscale’s Ethereum Trust (ETHE), which currently boasts an AUM of $11 billion.
Challenges and Implications for Grayscale’s Ethereum ETF
- Significant outflows from the Ethereum ETF could average $110 million per day, reflecting approximately 30% of Ether’s daily trading volume on Coinbase.
- Recent data indicates that ETHE has traded at a discount of up to 26% compared to its net asset value (NAV) in the past three months.
- Upon transitioning into a spot ETF, analysts anticipate potential redemptions as the discount narrows. This mirrors the trajectory observed for GBTC post-conversion.
Regulatory Impact on Ethereum ETF Performance
- Following the SEC’s approval of spot Ether ETFs, the discount on ETHE has started to narrow, indicating a shift in market sentiment.
- While initial outflows into Ether ETFs may not meet expectations, the approval itself carries significant implications for Ether’s status as a regulated asset.
- The regulatory clarity achieved through the ETF approval could alleviate previous uncertainties surrounding Ether’s performance and market perception.
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