Grayscale Ethereum Trust ETF records net outflows of $1.5B

Grayscale Ethereum Trust (ETHE) recorded over $1.5 billion in net outflows, following a $356 million outflow on July 26. Market observers predict that the converted ETHE spot Ethereum ETF could run out of assets in a few weeks amid the rate of outflows.

The Grayscale spot Ethereum ETF recorded historic has seen continued outflows while competing exchange-traded funds (ETFs) are overwhelmed with inflows. Grayscale’s ETHE had already seen $1.16 billion in outflows in the previous trading days, bringing the net outflows to over $1.5 billion.

July 26 was reportedly volatile for all ETFs, with net outflows of $163 million since their launch on July 23. Data revealed the converted Ethereum ETF experienced a contrasting trend with the newly launched Ethereum Mini Trust(ETH). Ethereum Mini Trust(ETH) recorded a net inflow of $44.9 million after the launch.

Grayscale Ethereum Trust (ETHE) sheds over $1.2 billion in assets 

ETHE’s total outflows surpassed the other eight ETH ETFs’ combined inflows since their launch for trading on Tuesday.

The U.S. SEC reportedly approved nine new spot ETFs after an eight-month back-and-forth approval process between the regulator and potential Ethereum ETF issuers.

The latest endorsement by the SEC is undoubtedly a significant moment for the industry and highlights the regulatory body’s changing attitude towards digital assets from outright rejection to reform.

–Phillippe Bekhazi

ETHE recorded a third day of outflows after a net outflow of more than $300 million. Meanwhile, data revealed that six ETFs recorded inflows on Thursday, led by Blackrock’s ETHA, which had over $70 million in inflows. 

The recently launched Grayscale’s Mini Trust (ETH) also recorded $58 million in total inflows, while Fidelity’s FETH recorded over $34 million. Bitwise’s ETH ETF recorded $16.34 million in inflows, while VanEcks’ ETH ETF amassed $8 million.QETH, Invesco’s ETH ETF, logged over $6 million, while 21 shares’ CETH and Franklin Templeton’s EZET remained neutral.

Analysts say that the outflows indicate investors are reconsidering these financial products as investment options. After its approval, the Grayscale Ethereum ETF was reportedly listed on NYSE Arca. 

Analysts speculate ETHE’s Ether reserves could deplete in a few weeks

The Grayscale ETF ETHE charges significantly higher management fees of 2.5% compared to other spot Ethereum ETFs that charge fees as low as 0.19%. 

To curb the outflows, Grayscale launched Grayscale Mini Trust Ethereum ETF(ETH), which charges a merger of 0.15% in management fees. Data showed that the Grayscale Ethereum Mini Trust(ETH) management fee is currently the lowest in the market.

The new US Ethereum ETFs have experienced inflows of US$1bnthis week. However, similar to the Bitcoin ETF launch, Grayscale is seeing significant outflows from its incumbent fund. As a result, the net flows since the launch for all US ETH ETFs amount to a US$180m outflow. pic.twitter.com/f4PegKatdF

— James Butterfill (@jbutterfill) July 26, 2024

Consequently, Grayscale ETH recorded total inflows of $119.1 million this week. However, the cumulative effect of the over 7% drop in Ether’s value and ETHE’s outflows constitutes over $7 billion worth of assets under the company’s management. 

Market observers predict a continued trend in Grayscale ETHE outflows, which could see the crypto asset manager deplete ether in a few weeks. They added that the outflows will likely increase selling pressure on ether’s price until the net outflows reduce.