Ethereum
ETF Approvals Will Drive Ethereum’s Long-Term Growth Despite Near-Term Headwinds – Kaiko Research
Kaiko Research said on May 27 The timely approvals of the Ethereum ETF are a positive sign for the digital asset’s long-term growth despite potential near-term headwinds.
According to Kaiko’s report, the approval removed much of the regulatory uncertainty around Ethereum’s classification as an asset class.
Will Cai, head of indices at Kaiko, said the approval means the SEC is implicitly treating ETH as a commodity rather than a security. He added:
“[The approvals have] significant and likely positive ramifications for how any similar tokens will be regulated in the United States…”
Contrary to prior expectations, the SEC approved ETF 19b-4 filings on May 23. The agency must still approve S-1 orders. Spot Ethereum ETFs are expected to launch in the coming weeks or months.
Grayscale can see outputs
Despite his optimism about regulatory changes, Kaiko believes that Shades of grey The ETHE fund will likely experience outflows, which could put selling pressure on ETH as the new funds begin trading.
He wrote :
“The overall impact of ETHE buybacks on the market is still uncertain.”
Grayscale’s ETHE currently has $11 billion in assets under management (AUM). Kaiko expects the fund to see average daily outflows of $110 million after it begins trading as an ETF.
In comparison, Grayscale’s Bitcoin fund, GBTCrecorded capital outflows amounting to $6.5 billion, or 23% of its assets under management, in its first month of trading as an ETF.
Additionally, inflows from other ETFs offset or exceeded outflows from GBTC at the end of January.
Hong Kong ETF
Kaiko also drew attention to Hong Kong ETH ETFs. The company said the “lackluster” launches of foreign funds indicate increased uncertainty about the impact of ETHE redemptions on the market.
Based on separate data From Farside, Hong Kong spot ETH ETFs have seen net outflows of $4.4 million since their launch in early May.
Finally, Kaiko commented on centralized exchange data. ETH market depth is near $226 million, about 42% lower than its pre-FTX average levels. ETH is only 40% concentrated on American exchanges, compared to 50% at the start of 2023.