Grayscale Transfers $1 Billion in Ethereum Ahead of ETF Debut

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 month.

The first spot Ethereum exchange-traded funds (ETFs) are set to begin trading in the United States on July 23, 2024.

This development comes as Grayscale, a major crypto asset manager, transferred $1 billion worth of Ethereum to Coinbase Prime, sparking excitement and speculation in the crypto community.

The U.S. Securities and Exchange Commission (SEC) gave its final approval for these ETFs, paving the way for several major investment firms to enter the Ethereum ETF market.

Among the approved issuers are 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‘s #Coinbase Prime Deposit wallet address 0x27d1ec44964fB7554844090b02c7C81aa01F20E6 transferred 292,000 #ETH (approximately $1 billion) to Coinbase’s hot wallet address 0x2zhz31Ae9EFCCE479654c4926dec5F6209531Ca7b 8 hours ago.https://t.co/pBgxjwVS1o pic.twitter.com/3xL0Pc6t4C

— iChainfo (@iChainfo) July 23, 2024

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.

Moreover, 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.

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