Grayscale, Suppressing Bitcoin Price, May Do the Same to Ethereum
Grayscale Investments' establishment of a spot Ethereum ETF may create a selling pressure on the Ethereum price.
Kaiko analysts said that Grayscale's Bitcoin fund shrank by 23% ($6.5 billion) in the first month after converting to an ETF.
Analysts wrote that if the company's Ethereum fund turns into an ETF, there could be an average daily outflow of $110 million from the fund. This amount corresponds to 30% of Ethereum's daily trading volume on Coinbase.
Approximately $11 billion worth of assets are currently held in Grayscale Ethereum Trust (ETHE).
ETHE has traded at a 26% discount to its net asset value over the last three months. According to Kaiko analysts, it is "reasonable to expect" that money will come out of the fund if it turns into an ETF and the spread is closed.
Still, although the amount of money entering spot Ethereum ETFs “may be disappointing in the short term,” Kaiko analysts wrote, “the [SEC's approval] decision has significant implications for ETH as an asset, reflecting the regulatory uncertainties that have weighed on ETH's performance over the past year.” "It eliminates some of it," he said.