Ethereum ETF: Here’s what happened

The Ethereum ETF launch was one of the most anticipated events of the last few months. Along with many other bullish factors, it captured the excitement of the crypto community. Now that the dust has settled from the initial excitement, let’s take a look at what happened and answer the question on everyone’s lips. Has it been a fail or a success?

Let’s dive in.

Inflows and outflows 

The trading volume for the Ethereum ETF started off with a bang! There were positive numbers right out of the gate, however, we saw a shift to negative outflows as that first week progressed (you can track everything here https://farside.co.uk/?p=1518).The primary reason for this shift? The Grayscale Ethereum Trust.

As you may know, Grayscale is one of the largest digital asset management firms in the world and its investment products are widely used by institutional investors. Their Grayscale Ethereum Trust (ETHE) was formed in 2017 and has been a primary vehicle for institutions to gain exposure to Ethereum without directly purchasing and holding it. However, the value of Ethereum in the trust doesn’t always align with the true market value of Ethereum, and this is why selloffs occur.

You see, up until now, it wasn’t particularly easy for investors to exit out of the trust. But with the launch of the ETF, they have a new avenue to seek the true value of Ethereum. This is why we are seeing such heavy selling out of the trust.

However!

The heavy selling is no reason to be alarmed. In fact, we’ve been here before…

ETF déjà vu 

If this all sounds a little familiar, it’s because we saw the same thing play out when Bitcoin ETFs were launched. There was a flurry of activity, followed by aggressive offselling from, you guessed it, Grayscale. Investors took the opportunity to exit the Grayscale trust and move into something more aligned with market value.

Ethereum is playing out just like Bitcoin did.

And we all know how that turned out!

So is this cause for concern?

In my opinion, this is not something to be worried about. It’s an initial bleed that has to happen but will taper off quite quickly.

So, where does this leave us? 

Just like Bitcoin before it, Ethereum is navigating through the selloff and will no doubt emerge stronger and more robust at the end of it. We’re seeing a very similar pattern unfold and we’re watching it with interest.

Could this be why so many crypto whales have been heavily accumulating Ethereum over the last few months leading up?

Regardless of the patterns playing out, the facts remain:

These ETFs open the door to a new wave of investors and institutions. 

They are looking for easy ways to invest in cryptocurrencies and include them in their portfolios. 

ETFs are a very bullish catalyst and will bring more widespread adoption into the crypto space.  

While centralised custody isn’t something we align with, the tidal wave of momentum and capital into the crypto space is.