TLDR
- Grayscale transferred $1 billion worth of Ethereum to Coinbase Prime ahead of Ethereum ETF trading debut.
- The first spot Ethereum ETFs in the US are set to begin trading on July 23, 2024.
- Multiple firms including BlackRock, Fidelity, and Grayscale are launching Ethereum ETFs.
- Grayscale is offering a competitive 0.15% management fee for its Ethereum mini-Trust.
- Analysts predict increased institutional interest could potentially double Ethereum’s price in the next 6-18 months.
Grayscale, a major crypto asset manager, transferred $1 billion worth of Ethereum to Coinbase Prime in preparation for Ethereum ETFs launching later today.
The U.S. Securities and Exchange Commission (SEC) has given final approval for these ETFs, allowing several major investment firms to enter the Ethereum ETF market. Approved issuers include well-known names such as BlackRock, Fidelity, 21Shares, Bitwise, Franklin Templeton, VanEck, and Invesco Galaxy.
Grayscale’s $1 billion transfer, which occurred on July 22, is seen as a preparatory move for the launch of its own Ethereum ETF. The company is converting 10% of its Grayscale Ethereum Trust (ETHE) holdings into a separate Ethereum ETF. This new fund is expected to start with this transferred amount and will be listed on the New York Stock Exchange.
Grayscale announced that its Ethereum mini-Trust will have a management fee of only 0.15%, making it the lowest among all prospective Ethereum ETF issuers. The company plans to waive all fees until net inflows reach $2 billion and will offer 0% fees for the first six months of trading.
The launch of these ETFs is expected to increase institutional interest in Ethereum. Eugene Cheung, head of institutions at Bybit, noted that institutional investors have already doubled their Ethereum exposure since the ETF announcement, from 6.54% to 14.29%. In comparison, retail investor allocation rose more modestly from 7.4% to 9.52%.
This growing institutional interest has led to optimistic price predictions for Ethereum. Some analysts believe that the cryptocurrency’s price could potentially double in the next 6 to 18 months. As of July 23, 2024, Ethereum was trading at around $3,478, which is still about 28% below its all-time high of over $4,800 reached in November 2021.
The introduction of Ethereum ETFs follows the successful launch of Bitcoin ETFs earlier in the year. Coinbase, a leading cryptocurrency exchange, will serve as the custodian for eight of the nine newly approved Ethereum ETFs, similar to its role with Bitcoin ETFs.
While there’s excitement surrounding the ETF launches, some market watchers suggest caution. Wintermute, an algorithmic trading firm, has indicated that the demand for Ethereum ETFs might be lower than initially expected. However, many analysts remain optimistic about their debut.
Jon Campagna, managing partner at crypto hedge fund Nexyst Digital, dismissed claims that Grayscale might be preparing for a sell-off to reinvest in another crypto, such as Solana. He explained that Grayscale’s transfer is part of its plan to move 10% of its Grayscale Ethereum Trust holdings into its separate Ethereum ETF.
