In a surprising turn of events, the U.S. Securities and Exchange Commission (SEC) gave its approval to eight Ethereum exchange-traded funds (ETFs) on May 23. This development sparked a sense of optimism in the market. However, what was even more astonishing was the minimal impact this news had on the price of Ethereum. Despite the SEC’s announcement, Ethereum’s price only saw a modest increase from $3,742 to $3,859 by May 28.
Leading up to the approval, Ethereum’s value had already seen a significant rise of nearly one-third. However, concerns arose when indications suggested that the SEC might reverse its decision, causing investors to worry about the $11 billion Ethereum Trust (ETHE) managed by Grayscale. This uncertainty had a notable impact on the price movement. To stay updated on the latest financial and business news, visit COINTURK FINANCE.
Grayscale had been experiencing substantial outflows from its Bitcoin Trust (GBTC) for several months, and now the market is concerned about the possibility of a similar trend occurring with ETHE. After the approval of spot Bitcoin ETFs, GBTC witnessed an outflow of $6.5 billion over the course of a month, which amounted to 23% of its assets under management (AUM).
On May 27, Kaiko Research released a report estimating that if history were to repeat itself, ETHE could experience an average daily outflow of $110 million. This prediction further adds to the apprehension surrounding the situation.
Toni Mateos, the co-founder of LAOS Network, a platform that enables the creation of assets on Ethereum Virtual Machine compatible chains, also anticipates significant outflows from ETHE. Mateos drew parallels between GBTC and ETHE but highlighted a crucial difference in the significance of these Grayscale products in their respective markets. At the time of the approval of spot Bitcoin ETFs, GBTC held around $30 billion worth of Bitcoin, accounting for 3.5% of Bitcoin’s market value. On the other hand, ETHE only holds $11 billion worth of Ethereum, which represents 2.2% of the market value. Mateos emphasized this distinction.
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Disclaimer: The information provided in this article should not be considered investment advice. Investors should be aware of the high volatility and associated risks of cryptocurrencies and should conduct their own research.
