As a researcher with a background in finance and experience in analyzing cryptocurrency markets, I find the potential outflows from Grayscale’s upcoming Ethereum ETF to be an intriguing development. Based on the data provided by Kaiko, if we assume that the Ethereum Trust (ETHE) will experience similar outflows as the Bitcoin Trust (GBTC) did in its first month, then we could see an average daily outflow of $110 million.
According to a report by Kaiko, Grayscale’s anticipated Ether ETF might experience an approximate daily redemption of around $110 million during its initial month, based on the precedent established by the company’s Bitcoin Trust.
As an analyst, I’d rephrase that as: With the SEC’s recent approval of Ether-backed Spot ETFs last week, this projection takes that development into account.
Grayscale’s ETH ETF Outflows Could Reach $110M
On January 11, The Grayscale Bitcoin Trust (GBTC) transformed from a closed-end fund into an exchange-traded fund (ETF). According to Kaiko analysts’ reports on May 27, the trust saw a significant withdrawal of approximately $6.5 billion, which represented a 23% decrease in its assets under management (AUM) within the first month.
The Grayscale Ethereum Trust (ETHE), with an assets under management (AUM) value of $11 billion, could experience daily redemptions akin to those of GBTC, potentially leading to an average withdrawal rate of approximately $110 million. This amount represents around 30% of the average daily Ethereum trading volume on Coinbase.
As an analyst, I’ve observed that over the past three months, the Grayscale Ethereum Trust (ETHE) has been trading at a significant discount of up to 26% compared to its net asset value (NAV). According to Kaiko researchers, this trend may change once ETHE converts into a spot Exchange-Traded Fund (ETF). In such a scenario, it’s reasonable for me to anticipate potential outflows or redemptions as the discount between the market price and NAV narrows.
As the Head of Indices at Kaiko, I’ve observed the SEC’s approval of spot Ethereum ETFs with great interest. This decision implies that the SEC views the underlying asset, Ethereum without staking, as a commodity rather than a security. This classification carries significant positive implications for regulating similar tokens in the U.S., particularly in terms of trading, custody, and transfer procedures.
SEC’s Approval of Ethereum ETF
Last week, several issuers adjusted their SEC filings by excluding staking, making the probability of SEC approval more tangible. According to a Bloomberg report on May 20th, this action boosted the likelihood from a mere 25% to a much more promising 75%. As an analyst, I’ve closely monitored these developments and can confirm that this shift in filings significantly improves the chances of SEC approval.
Over the past month, there had been a gradual decrease in optimism regarding the approval of an ETF for Ethereum (ETH) as doubts about its regulatory standing grew increasingly prevalent.
Since the Securities and Exchange Commission (SEC) gave its approval for spot Ethereum ETFs on May 23, Grayscale’s Ether Trust (ETHE) discount has lessened, even though ETHE still hasn’t started trading as a spot ETF.
Beginning on May 1, ETHE’s trading price surpassed its net asset value by more than 25%. Yet, this difference progressively narrowed over the course of the month, reaching a mere 1.28% gap between price and net asset value by May 24, as indicated by YCharts.
At the close of January, Kaiko analysts noted that while GBTC experienced outflows, other Bitcoin ETFs saw inflows, effectively balancing things out. Their analysis suggested that a potential underperformance of Ethereum ETFs in the near term does not diminish the importance of the ETH approval, which could substantially alter market sentiment towards Ethereum.
Read More
- Hades Tier List: Fans Weigh In on the Best Characters and Their Unconventional Love Lives
- Smash or Pass: Analyzing the Hades Character Tier List Fun
- Why Destiny 2 Players Find the Pale Heart Lost Sectors Unenjoyable: A Deep Dive
- Why Final Fantasy Fans Crave the Return of Overworlds: A Dive into Nostalgia
- Sim Racing Setup Showcase: Community Reactions and Insights
- Understanding Movement Speed in Valorant: Knife vs. Abilities
- How to Handle Smurfs in Valorant: A Guide from the Community
- FutureNet Co-Founder Roman Ziemian Arrested in Montenegro Over $21M Theft
- Is Granblue Fantasy’s Online Multiplayer Mode Actually Dead? Unpacking the Community Sentiment
- Honkai: Star Rail’s Comeback: The Cactus Returns and Fans Rejoice
2024-05-28 13:16