If Grayscale's upcoming Ethereum spot ETF follows the same path as the Grayscale Bitcoin Trust has, the fund could see an Medium outflow of $110 million per day in its first month.
Grayscale's Ethereum ETF is forecast to outflow $3 billion in its first month. Photo: CryptoSlate
Grayscale is a cryptocurrency asset management company founded in 2013 and headquartered in New York, United States. Unlike the other 9 ETF funds from BlackRock or Fidelity that were completely newly launched, Grayscale's ETF was converted from one of the company's key products, Grayscale Bitcoin Trust (GBTC) and wasapproved by the SEC. upgrade” to become a Bitcoin ETF in January 2024.
In Kaiko's May 27 report, 23% of Grayscale Bitcoin Trust (GBTC) assets, equivalent to $6.5 billion, flowed out of the fund in the first month since its launch on January 11. /2024.
The above scenario can be repeated with the Ethereum ETF Grayscale Ethereum Trust - ETHE. The fund currently manages assets worth $11 billion. According to Kaiko, if the fund has an outflow similar to GBTC, this number could reach 110 million USD in outflows from the ETHE fund on Medium per day, equivalent to 30% of the Medium daily volume of ETH on the exchange. Coinbase.
Over the past 3 months, Grayscale's ETHE stock price is trading up to 26% lower than the underlying asset ETH . Therefore, Kaiko experts believe that it is completely reasonable that ETHE witnessed outflow and There is pressure from users to convert as this difference decreases. NAV is the value of the fund's assets, calculated by subtracting the total value of liabilities from the total asset value.
After "upgrading" to a spot ETF, the difference between GBTC and the actual price of BTC has narrowed significantly, although before that, the difference was up to 17%. Many investors tend to withdraw GBTC to Preserve price or sell for a more favorable price.
According to YCharts , the difference between GBTC and Bitcoin price has decreased to only 0.03% and has remained stable at this level for a long time since the Bitcoin ETF was approved.
GBTC's discount has decreased by 0.03% from May 24, 2024. Source: YCharts
On May 1, ETHE was trading at a premium of more than 25%, before gradually falling amid speculation that the SEC would approve Ethereum spot ETFs . However, data from YCharts shows that the fund quickly reached a gap of 1.28% on May 24, when the SEC officially approved Ethereum spot ETFs .
ETHE's annual discount to NAV is quickly narrowing amid SEC approval of the ETF. Source: YCharts
Also according to Kaiko's report, ETH saw its most recent volatility on May 22, increasing from 60% to nearly 90% before decreasing over the weekend.
ETH volatility. Source: Kaiko
The drastic change in ETH investor sentiment is also evident through the Derivative market. In just three days, funding rates for perpetual futures contracts have jumped from their lowest in more than a year to their highest in months.
Kaiko analysts also emphasized that GBTC's outflow was also "surpassed" by the inflow volume into other Bitcoin ETFs at the end of January 2024.
Kaiko concludes that even if the Ether ETF sees short-term outflows, SEC approval is still significant for ETH as an asset class, eliminating an uncertain regulatory approach, which has impacted to the growth of the Ethereum ecosystem over the past year.
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