#Grayscale introduces a new fund #ETF based on #Ethereum that could bring huge changes to the cryptocurrency market.
Kaiko analysts predict that the fund may generate losses of USD 110 million per day in the first month. This could put pressure on Ethereum's price and affect its attractiveness to investors.
Problems with $ETH
Grayscale's Ethereum ETF currently has $11 billion in assets. If the ETF suffers the same fate as the Bitcoin ETF, we will see significant outflows. Analysts from Kaiko predict that the fund could lose USD 110 million a day. This represents approximately 30% of the total daily Ethereum volume on Coinbase.
“ETHE currently manages over $11 billion in assets, making it by far the largest investment vehicle in ETH. GBTC's outflows in the bitcoin ETF's first month of trading were $6.5 billion, representing about 23% of its AUM at launch. If we saw a similar volume of ETHE outflows, it would amount to $110 million in average daily outflows or 30% of average daily ETH volume on Coinbase.”
Over the past three months, the fund has traded at a 26% discount to its assets. This means that the price of a unit of the fund was 26% lower than the value of the corresponding amount of Ethereum. Kaiko researchers predict that outflows will increase when the discount falls to zero. As a result, this may cause significant market turbulence.
The attractiveness of Ethereum ETFs
One of the main arguments against investing in Ethereum ETFs is the inability to receive returns from staking. Investors who own Ethereum by purchasing it directly into their wallet can use staking and obtain additional profits. In the case of ETFs, this is not possible.
Why should investors choose assets that do not provide full benefits? This is a question many investors ask themselves. There are serious amounts at stake, so the decision to invest is not easy.
The possibility of adding staking functionality to ETFs in the future exists, but it doesn't seem close to happening at this point. This could make launching ETFs a huge challenge for ETH.
Consequences for the cryptocurrency market
If the ETH ETF fails to attract investors, this could be beneficial for Bitcoin. Investors may decide to transfer their funds to the Bitcoin network, which seems to be a more stable choice. This could strengthen Bitcoin's position in the market in quite a short period.
However, one thing is certain. The launch of Grayscale's Ethereum ETF is a major event in the cryptocurrency market. The results of this venture may have long-term consequences for the entire market. The whole matter is also causing quite a stir on the Internet, and market observers are wondering which project will get its own ETF.
