TO eth-headed-for-a-bull-run” rel=”nofollow”>recent market report from research firm Kaiko pointed out how Grayscale's ethereum Spot ETF could have a negative impact on the price of ethereum (eth). This is based on the company's expectations that Grayscale's ethereum Trust (ETHE) could follow a similar path to bitcoin-etf/” rel=”nofollow”>Grayscale bitcoin Trust (GBTC).
ethereum Could Face Significant Selling Pressure Due to Grayscale Exits
Kaiko noticed that ethereum could face significant selling pressure from Grayscale's ETHE once the Spot ethereum ETFs begin trading. This is because the background has been bitcoin-reaches-largest-discount-ever/” rel=”nofollow”>trade at a discount between 6% and 26% in the last three months, and is likely to coincide with a wave of profit-taking. It's worth mentioning that Grayscale's ETHE has previously operated as a closed-end fund, and Grayscale simply applied to convert it to an exchange-traded fund (ETF).
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The research firm noted that Grayscale's ETHE has more than $11 billion in assets under management (AuM). That means $110 million of average daily outflows could flow out of the fund if Grayscale's ethereum ETF sees a similar magnitude of outflows as Grayscale's bitcoin ETF, whose outflows of $6.5 billion in the first month of trading represented the 23% of the fund's assets under management.
bitcoin-etfs/” rel=”nofollow”>Grayscale bitcoin Trust (GBTC) It also operated similarly before becoming an ETF. This is believed to have contributed to the fund's $6.5 billion in outflows in its first month of trading, with many investors making profits since purchasing the fund at a discount. Therefore, Kaiko hopes that something similar could happen with Grayscale's ETHE.
The outputs that bitcoin-trust-first-inflows-in-3-months/” rel=”nofollow”>Grayscale bitcoin Spot ETF It is known to have put significant selling pressure on the price of bitcoin, causing the flagship cryptocurrency to drop significantly. As such, the same can be expected with the ethereum price if Grayscale's ethereum Spot ETF suffers a similar fate.
However, in addition to investors benefiting from Grayscale's bitcoin ETF, Grayscale's fund fee is believed to be another factor that caused the bitcoin-looks-stable-despite-heightened-gbtc-outflows-investors-count-on-meda-presale-skyrockets/” rel=”nofollow”>important departures recorded at that time. For context, Grayscale's fee was the highest among all bitcoin ETF issuers. As such, potential capital outflows from Grayscale's ethereum ETF could be minimally reduced if the asset manager makes its fee competitive this time.
ethereum's future trajectory remains bullish
Kaiko suggested that ethereum-breakout/” rel=”nofollow”>ethereum It is still bound to make significant price gains once other ethereum spot ETFs start recording impressive inflows that may eclipse Grayscale's ETHE outflows. Something similar happened with bitcoin, as Kaiko pointed out that bitcoin-etf-outflows-end-experts/” rel=”nofollow”>GBTC outputs in grayscale They were offset and outperformed by inflows from other bitcoin ETFs in late January.
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Thanks to the impressive demand recorded by these bitcoin ETFs, the flagship cryptocurrency reached a bitcoin-breaks-through-69000-setting-new-record/” rel=”nofollow”>new all-time high (ATH) in March earlier this year. ethereum ETFs could also trigger an eth price rally depending on the number of inflows these funds record once they begin trading.
Meanwhile, Kaiko noted that even if inflows disappoint in the short term, the mere approval of these funds already has “significant implications for eth as an asset” as it confirms that it is not a security. This has helped eliminate the ethereum-security-considered-in-eth-spot-etf/” rel=”nofollow”>regulatory uncertainty that has weighed on the price of ethereum for some time now.
Featured image from NewsBTC, chart from Tradingview.com
