Grayscale’s Spot Ether ETF Projected to See Daily Outflow of $110 Million on Average: Kaiko
Grayscale’s forthcoming spot Ethereum exchange-traded fund (ETF) may face significant outflows, potentially averaging around $110 million per day.
In a recent report, analysis firm Kaiko said the projection is based on the pattern observed with Grayscale’s Bitcoin Trust (GBTC) when it converted from a closed-end fund to an ETF on January 11.
In the first month following the conversion, the GBTC saw 23% of its assets under management (AUM) flow out, totaling $6.5 billion.
Grayscale’s Ether Trust (ETHE) currently has an AUM of $11 billion.
If it experiences similar outflows as GBTC, it could result in average daily outflows of $110 million, representing around 30% of Ether’s average daily trading volume on Coinbase, as stated by Kaiko.
Recent data has shown that over the past three months, ETHE has traded at a discount of up to 26% compared to its net asset value (NAV).
Kaiko researchers highlighted that once it transitions into a spot ETF, it’s reasonable to expect outflows or redemptions as the discount narrows.
A similar trend was observed with GBTC, as its discount to NAV significantly narrowed after the conversion to an ETF.
It traded at a discount of up to 17% before the conversion but has gradually narrowed over time, allowing investors to exit the trust at or above their entry price.
Following the Securities and Exchange Commission’s initial approval of spot Ether ETFs on May 23, ETHE’s discount has already started to narrow.
However, the ETF has yet to commence trading as a spot ETF.
Data from YCharts reveals that ETHE’s discount had exceeded 25% on May 1 but gradually decreased over the month amid speculation surrounding the SEC’s potential approval of spot Ether ETFs.
By May 24, the discount had reached 1.28%.
Kaiko
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