From the stance of speculators and analysts, the crypto firm Grayscale must have seen a vision for the ETF market.
The United States launched the first-ever spot ether ETFs (Exchange Traded Funds) on Tuesday. These ETFs will invest directly in ether, enabling investors to buy the cryptocurrency, just like buying bond index funds and stock. On the first day of trading, spot ether ETFs collectively saw over $1 billion in volume, while JPMorgan analysts estimate net sales of $104 million.
Grayscale was founded in 2013 and is part of Barry Silbert’s crypto conglomerate Digital Currency Group. And since its inception, the company has been building a trust that holds over $9 billion worth of ether. However, since the launch of ether ETFs, the company converted the trust into an ETF.
With the SEC paving the way for ETFs, Grayscale will face many competitors, allowing investors to seek out the lowest fees. Major firms like Fidelity, Franklin Templeton, BlackRock, and Invesco already offer their spot ether ETFs.
In January, the approval of bitcoin ETFs caused many investors to leave Grayscale’s products for cheaper alternatives, resulting in the same outcome.
As money flowed into new offerings, the Grayscale Ethereum Trust (ETHE) saw $485 million in redemptions. JPMorgan attributed this to investors switching to cheaper alternatives or using ETF conversions for better liquidity.
According to Grayscale, the ETHE saw its trading volume increase to $500 million on the second day of ETF trading. The total value traded for ETH was just over $100 million, up about 54% from the previous day’s trading. Meanwhile, the mini ETF experienced $46 million in net inflows.
ETHE has been and continues to be a trusted, efficient tool for investors interested in gaining exposure to Ethereum as a regulated U.S security. The bigger picture is that the $1 billion volume on day one is a testament to the many industry participants showing up to play their part in supporting investors and the Ethereum ETP ecosystem.
David LaValle, Grayscale global head of ETFs.