Kaiko Research recently revealed that the approval of spot Ethereum ETFs is a positive development for the long-term growth of the digital asset, despite potential short-term challenges. The report highlighted that the approval has brought clarity to Ethereum’s classification as an asset class, removing regulatory uncertainty.
Will Cai, Head of Indices at Kaiko, noted that the approval indicates the SEC is treating ETH as a commodity rather than a security, with potential widespread implications for similar tokens in the US. The SEC approved the ETFs’ 19b-4 filings on May 23, with spot Ethereum ETFs expected to launch in the near future.
However, Kaiko predicts that Grayscale’s ETHE fund may experience outflows, putting pressure on ETH as new funds enter the market. The report estimated that ETHE could see an average daily outflow of $110 million once it begins trading as an ETF, drawing comparisons to the outflows experienced by Grayscale’s Bitcoin fund, GBTC.
Additionally, Kaiko highlighted the lackluster performance of Hong Kong’s ETH ETFs, suggesting uncertainty surrounding the impact of ETHE redemptions on the market. Data from Farside indicated that Hong Kong’s spot ETH ETFs have seen $4.4 million in net outflows since their launch in early May.
Lastly, Kaiko pointed out trends in centralized exchange data, revealing that ETH’s market depth has decreased compared to previous levels. The concentration of ETH on US exchanges has also decreased, indicating a shift in trading activity.
The development of spot Ethereum ETFs has significant implications for the Ethereum market, with both positive and negative outcomes predicted by industry experts.
