Grayscale Ethereum Trust in a move that has surprised industry observers recorded a massive discount within a one-year period. Renowned ETF analyst Nate Geraci highlighted the dramatic decline from almost 50% to 1.5% over the past year may be attributed to the approval of numerous Ethereum exchange-traded funds (ETFs).
Record Low Discount for Grayscale
Remarkably, the fund was trading at over a 20% discount in mid-May, to its net asset value (NAV) before the U.S. Securities and Exchange Commission (SEC) surprised many by approving several 19b-4 forms, overturning expectations that the SEC would reject spot Ether ETF applications.
Following the unexpected decision by the regulatory body, there was a notable price rally in May. Analysts predicted that Grayscale may witness substantial outflows based on market dynamics. This speculation was based on the performance of Grayscale Bitcoin Trust when it converted to an ETF.
Although the SEC has approved the 19b-4 forms, these products have not yet started trading. This is because their approval involves a two-step verification process. After the initial approval, the SEC still needs to approve various S-1 registration forms.
Will SEC Give Final Approval for Spot Ethereum ETF in June?
As per SEC Chair Gary Gensler the launch of these products is probable this summer, although he did not specify an exact timeline. Interestingly, Geraci is optimistic of a possible final approval for Ethereum ETF products early next week.
Last week, potential ETF issuers such as BlackRock, Fidelity, and Grayscale submitted their updated filings. Notably, Grayscale’s GBTC has struggled to compete with ETFs from industry giants like BlackRock and Fidelity due to its high fees. In comparison, the fees are five times the average fee for other products (0.3%). Despite significant outflows, Grayscale has not reduced fees for its flagship product.
Anticipation for SEC’s Next Move
Some speculate that Grayscale may lower fees to address these outflows, but Geraci disagrees. He predicts that Grayscale will engage in a fee competition through its Ethereum Mini Trust instead. Additionally, Geraci does not foresee massive outflows from Grayscale’s Ether ETF: “My guess is decent outflows, but not as bad as we saw w/ GBTC.”
Market watchers are eagerly anticipating the next move by the SEC so that the United States can join the likes of Hong Kong that has approved spot Ethereum ETF.
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