Kaiko: Grayscale Ethereum ETF may lose $110 million per day in first month

Author: Jesse Coghlan, CoinTelegraph; Compiled by Wuzhu, Golden Finance

Grayscale's yet-to-be-launched spot Ethereum exchange-traded fund (ETF) could lose an average of $110 million per day if it follows a similar pattern to the Grayscale Bitcoin Trust in its first month.

The Grayscale Bitcoin Trust (GBTC) converted from a closed-end fund to an ETF on January 1. The company saw an outflow of 23% of its assets under management in its first month when it launched in November, totaling $6.5 billion, Kaiko analysts wrote in a May 27 report.

ETHE has $11 trillion in assets under management. Kaiko said that if it had “outflows similar to GBTC,” “it would be equivalent to an average daily outflow of $110 million, or 30% of the average daily trading volume of ETH on Coinbase.”

Over the past three months, Grayscale’s ETHE has traded at a discount of up to 26% to its net asset value (NAV). Kaiko researchers noted that once it becomes a spot ETF, it is “reasonable to expect” outflows or redemptions as the discount narrows.

GBTC’s discount to NAV (its trading price is lower than the value of the fund’s holdings) narrowed sharply after the conversion to an ETF.

Before the conversion, it was trading at a discount of up to 17%, but the discount has narrowed over time, allowing many holders to exit GBTC at the same or higher price than they bought it.

The price on May 24 is currently trading at a 0.03% discount, according to YCharts, and has hovered around that level since then.

ETHE’s discount has narrowed since the SEC first approved a spot Ethereum ETF on May 23, even though it has yet to start trading as a spot ETF.

Data from YCharts shows that on May 1, amid speculation that the SEC would approve a spot Ethereum ETF, the index’s discount narrowed steadily over the month before quickly reaching a 1.28% discount on May 24.

Amid speculation of ETF approval, ETHE's discount to NAV narrowed rapidly year-to-date and narrowed again after approval. Source: YCharts

Kaiko analysts also noted that by the end of January, inflows into other Bitcoin ETFs had exceeded GBTC's outflows.

Kaiko concluded that even if Ether ETF inflows are “disappointing in the short term, the approval has important implications for ETH as an asset, removing some of the regulatory uncertainty that has weighed on ETH’s performance over the past year.”