Kaiko Research says on May 27 The approval of spot Ethereum ETFs is a sign that the digital asset will continue to grow in value over time, despite any short-term challenges.
Kaiko’s Report states that the decision has eliminated much of the uncertainty surrounding Ethereum’s classification.
Will Cai said that the SEC’s approval of ETH is an implicit recognition by the SEC to treat it as a commodity and not a security. He also said:
“[The approvals have] significant and likely positive ramifications on how all similar tokens will be regulated in the US …”
The SEC did not approve the ETFs’ 19b-4 forms as expected. May 23. S-1 orders must be approved by the agency. The launch of spot Ethereum ETFs is anticipated to take place in a few weeks.
Grayscale may see outflows
Kaiko is not optimistic about regulatory change, despite its belief that Grayscale’s ETHE will probably experience outflows which may put pressure on ETH when the new funds start trading.
You wrote:
“The overall market impact of ETHE’s redemptions is still uncertain.”
Grayscale ETHE has an AUM of $11 billion. Kaiko predicts that the ETF will see an average of $110 million in daily outflows once it starts trading.
Grayscale Bitcoin fund is comparable. GBTCIn its first month as an ETF,’s AUM was down by 23% or $6.5 billion.
By the end of January, inflows into other ETFs had offset or even exceeded GBTC’s outflows.
Hong Kong ETFs
Kaiko also called attention to Hong Kong ETH ETFs. The company stated that the foreign funds are a good investment. “lackluster” Launches have led to increased uncertainty about the impact of ETHE redemptions on the market.
Based on separate data Farside’s Hong Kong ETFs that track spot ETH saw net outflows totaling $4.4M since the launch of their products in May.
Kaiko concluded by commenting on the centralized data exchange. ETH’s current market size is approximately $226,000,000, or 42% lower than the average level of pre-FTX. ETH has only 40% of its market volume concentrated in US exchanges. This is down from 50% at the beginning of 2023.
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Source: cryptoslate.com