The US Securities and Exchange Commission (SEC) has approved nine Ethereum Exchange Traded Funds (ETFs) this week, marking a significant milestone for the crypto market after approving spot BTC ETFs earlier this year. The decision and subsequent approval has already impacted Ethereum in a major way, and will likely lead to a reshape in its market dynamics and future adoption strategies both by institutional players and investors alike. In this article, we will:

  • Explore how the Web3 market – and beyond – will be impacted (and already are being impacted) by the SEC’s decision to approve the Ethereum ETFs this week.
  • And analyze in particular how Grayscale’s Ethereum Trust, also called ETHA, is affecting the market following its massive net outflows.

The Crypto Market and the Approval of Ethereum ETFs

The SEC’s decision is set to impact Ethereum in a big way. The government agency has given its approval to eight asset managers this week, including Grayscale (2 funds), Bitwise, iShares, Invesco, Fidelity and Franklin Templeton.

  • These asset managers had all submitted applications to the Securities and Exchange Commission between Q4 of 2023 and just earlier this year.Their applications were finally approved over half a year later after they were submitted, and this will change a lot of things in the crypto market.
  • Following the approval – and before that to some extent – the interest of institutions and multinational corporations in Ethereum has skyrocketed. A Bitwise analyst has even predicted that Ethereum ETFs could “attract up to $15 billion in net inflows by the end of 2025.”
  • In addition, Ethereum itself has since a major spike since the announcement was made – as was to be expected. Over the past six months, ETH’s price is up by a staggering 42%. In addition, to reinforce its standing, the total number of staked ETH since the start of the year has surged to all time highs – near 33.3 million ETH. This means investors and institutions have confidence that the currency will continue on its trajectory. And after all, following the trend of BTC ETFs earlier in the year, why should it not?
  • In fact, the approval of both ETH and BTC exchange traded funds this year (in July and January respectively) will likely end up driving greater adoption of digital assets, especially as regards institutional investors – like BlackRock for example.

Grayscale’s Spot Ethereum ETF: A Sign of Things to Come?

While most Ethereum ETFs faced big net inflows following the SEC’s approval, Grayscale’s spot Ethereum ETF – ETHE – saw substantial net outflows in the first couple of days following the announcement.

  • The outflows from ETHE totaled somewhere around $1.2 billion before the weekend. Effectively, ETHE’s outflows have been higher than the net inflows into other spot Ethereum ETFs last week, a rather unexpected occurrence. If Grayscale’s outflow rate continues, its assets could rapidly be depleted.
  • The current average of net outflows for ETHE, in fact, stands at around $385 million per trading day. If the trend resumes this week and beyond, ETHE’s assets could end up being depleted before the end of August. In just the first three days of last week, ETHE witnessed $1.16 billion worth of net outflows, while essentially every other ETF generated inflows during the same period of time.
  • Where is all this outflow heading, you might rightly ask. Well, in the first two days of trading following the SEC’s approval, circa 160,930 ether entered Coinbase, with Grayscale’s ETHE seeing $811 million exit during the same period. As we saw with Bitcoin, Grayscale’s ETFs are becoming net sellers on the market – however this time around there is “less buying pressure from other ETFs to offset Grayscale’s selling,” according to DEX SynFutures CEO.

For more crypto-related news, and to start your very own decentralized gaming experience today, come join CoinGames or follow our Twiiter page for more updates, and read our blog for everything-crypto!