Greyscale Ethereum ETF Could Bleed $110M Daily in First Month: Caico
Greyscale's fledgling Ether (ETH) exchange-traded fund (ETF) could bleed an average of $110 million a day if it follows the same pattern as the Greyscale Bitcoin Trust in its first month.
The Greyscale Bitcoin Trust (GBTC) switched from a closed-end fund to an ETF on January 11, when it shed 23 percent of its assets under management in the first month — a total of $6.5 billion, Caico analysts wrote in May. 27 report.
ETHE has an AUM of $11 billion. If it had the same “outflow rate” as GBTC, “this would amount to an average daily outflow of $110 million, or 30% of the average daily volume of ETH on Coinbase,” Kaiko says.
Over the past three months, Greyscale's ETHE has traded at a 26% discount to its net asset value (NAV). Kaiko researchers note that once a position becomes an ETF, it is “reasonable to wait” as the offer narrows.
GBTC's discount to NAV — how much it traded below the value of the fund's holdings — narrowed significantly after converting to ETFs.
Before the reversal, it was trading at a discount of up to 17%, but has narrowed over time, allowing many holders to exit GBTC at their entry price or better.
According to YCharts, it is now down 0.03% for May 24, a level it has hovered at since then.
ETHE's discount has already fallen since the Securities and Exchange Commission gave the first nod to distinguish Ether as an ETF on May 23, although it has yet to begin trading as a spot ETF.
Related: What Comes After SpotEther ETF Approvals? Execs weigh in.
On May 1, ETHE was down more than 25% in price before falling steadily throughout the month, SEC Approving Ether ETFs, followed by a quick 1.28% drop on May 24, YCharts data shows.
Caico analysts noted in late January that GBTC's outflows outpaced inflows into other Bitcoin ETFs.
Kaiko concluded that even if the Ether ETF were to come in, “its near-term approval has significant implications for ETH as an asset, removing some of the regulatory uncertainty that weighed on ETH's performance last year.”
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