Ethereum Spot ETFs Approved! ✅
The U.S. Securities and Exchange Commission (SEC) approved eight spot Ethereum ETF funds on May 23. This development was a big surprise for the markets. However, it was noteworthy that the price of Ethereum did not show the expected reaction to this positive news. Ethereum's price, which was $3,742 ahead of the announcement, rose to just $3,859 by May 28.
In the days before the approval, the value of Ethereum had increased by almost a third. But concerns over Grayscale's $11 billion Ethereum Trust (ETHE) fund have significantly impacted price action after signs emerged that the SEC could reverse its decision.
This has raised concerns that major outbursts from the Grayscale Bitcoin Trust (GBTC) fund could be repeated. In the months following the approval of Spot Bitcoin ETF funds, the GBTC saw an exit of $6.5 billion, which corresponds to 23% of its assets under management. According to the report by Kaiko Research, a similar scenario may apply to ETHE, with an average daily outflow of $110 million.
Toni Mateos, co-founder of LAOS Network, predicts major exits from the Grayscale Ethereum Trust to new ETFs. Mateos noted that the high liquidity and low wages of ETF funds target a wider market compared to ETHE.
Mateos emphasized that although he saw similarities between GBTC and ETHE, the impact of these products on the markets was different. GBTC has about $30 billion in Bitcoin, which represents 3.5% of the Bitcoin market capitalization, while ETHE represents 2.2% of its market cap, with only $11 billion in Ethereum. Outputs to new ETFs should be more limited, Mateos said, given the smaller percentage of ETHE's market cap.
Be prepared for volatility with the approval of ETF funds.
• Track potential outputs on Grayscale products.
• Monitor Ethereum price movements and market trends closely.
