Grayscale’s upcoming Ethereum exchange-traded fund (ETF) could face substantial outflows, with an estimated average daily outflow of $110 million, according to a report by analysis firm Kaiko. This projection is based on the pattern observed with Grayscale’s Bitcoin Trust (GBTC) when it converted to an ETF in January. In the first month following the conversion, the GBTC saw $6.5 billion flow out, representing 23% of its assets under management (AUM). Grayscale’s Ether Trust (ETHE) currently has an AUM of $11 billion, and if it experiences similar outflows as GBTC, it could result in daily outflows of $110 million, approximately 30% of Ether’s average daily trading volume on Coinbase. Kaiko researchers also noted that the discount on ETHE compared to its net asset value (NAV) has reached up to 26% over the past three months. Once it transitions into a spot ETF, it is expected that the discount will narrow, leading to outflows or redemptions. The approval of spot Ether ETFs by the Securities and Exchange Commission (SEC) has already started to narrow ETHE’s discount. The approval of Ethereum ETFs has also paved the way for more crypto investment products, according to research from TD Cowen’s Washington Research Group. The Ethereum ETF approval came about six months earlier than expected, following the approval of Bitcoin ETFs earlier this year. This approval potentially confirms Ether’s status as a non-security, according to industry experts, and could extend to other tokens as well, solidifying their classification as commodities.
