Spot Ethereum ETFs are set to launch on July 23, following a rule change passed by the Securities and Exchange Commission more than two months ago.
according to a report According to Kaiko, the initial inflows into exchange-traded funds (ETFs) are likely to impact the price of Ethereum (ETH). However, it is still unclear whether the impact will be positive or negative.
“The launch of Ethereum futures ETFs in the US late last year was met with disappointing demand. All eyes are on the launch of spot ETFs with high hopes for rapid asset accumulation. While the full demand picture may not be clear for several months, Ethereum’s price could be sensitive to inflow numbers in the early days,” said Will Kaye, head of indices at Kaiko.
Several Ethereum ETFs from BlackRock, Fidelity, Bitwise, VanEck, 21Shares, Invesco, Franklin Templeton, and Grayscale are set to begin trading on July 23.
The influx of funds could lead to a rise in the price of Ethereum, although Ethereum futures-based ETFs have not been well received in the past year. There is cautious optimism about the accumulation of spot ETF assets and how this could reflect the price of Ethereum.
ETH prices briefly surged in May after the spot ETF was approved but have since trended lower. At $3,500, ETH is facing a critical supply wall.
Grayscale ETH ETF Fees
Grayscale, a leading cryptocurrency exchange-traded fund, plans to convert its ETHE fund into a spot exchange-traded fund and launch a $1 billion mini-fund from the original fund. Grayscale’s ETHE fees will remain at 2.5%, significantly higher than those of its competitors.
Most issuers will offer fee waivers to attract investors, with some waiving fees for six months to a year or until assets reach between $500 million and $2.5 billion. This fee war reflects the fierce competition in the ETF market, which has led ARK Invest to exit the ETH ETF race.
This mirrors Grayscale’s strategy for its Bitcoin (BTC) ETF, where they have maintained high fees despite competitive pressures and sell-offs.
According to Kaiko, Grayscale’s decision to maintain its high fees could lead to outflows from ETFs, resulting in sell prices similar to GBTC’s performance after conversion.
ETHE’s discount to NAV has recently diminished, indicating traders’ interest in buying ETHE below its face value to redeem it at NAV after conversion to make a profit.
ETH ETF Volatility
Additionally, ETH’s implied volatility has been rising over the past few weeks due to a failed assassination attempt on Donald Trump and President Joe Biden’s announcement that he will not run for president again, reflecting traders’ concerns about the ETF launch.
According to Kaiko, contracts expiring in late July saw volatility rise from 59% to 67%, indicating market expectations and potential price sensitivity to initial flow numbers.