Ethereum ETF Approvals Will Promote Long-Term Growth: Kaiko
Kaiko Research recently announced its approval. Spot Ethereum ETFStatements made by regulators point to a bullish future for the digital asset despite some immediate market challenges. The firm emphasizes that this development removes much of the regulatory uncertainty surrounding Ethereum’s classification, thus supporting its long-term growth.
Ethereum ETFs Await Final SEC Green Light
Kaiko Index President Will Cai pointed out the consequences of the SEC’s decision and stated how this decision points to a significant change. Ethereum perceived by regulatory bodies. “The SEC’s approval is a clear indication that Ethereum is considered a commodity rather than a security,” he said. This perception is critical because it is likely to set a precedent for the treatment of similar digital tokens in the US market.
Additionally, Cai emphasized that although the approval is an important step forward, the entire regulatory process requires further development. SEC approved ETFs 19b-4 Applications are available but you still need to approve S-1 orders. The expectation is that spot Ethereum ETFs could launch within weeks or months, marking a significant moment on the cryptocurrency investment avenue.
Grayscale Ethereum Fund Supports Outflows
Despite the optimism, Kaiko foresees some potential short-term volatility, especially regarding concerns grayscale‘s Ethereum fund ETHE. With $11 billion in assets under management, the fund could see significant outflows, which could put downward pressure on Ethereum prices. Kaiko estimates that ETHE will outflow an average of $110 million per day after its transition to ETF.
This scenario reflects the experience of Grayscale’s Bitcoin fund. GBTCThe ETF witnessed an outflow of 23% of its AUM in the first month of operations. However, it is noteworthy that other ETFs eventually compensate for these outflows, pointing to a possible balance that may also occur with Ethereum.
Hong Kong ETH ETFs See Net Outflow
Kaiko has also turned its focus to the global scene, specifically the underwhelming performance of Ethereum ETFs in Hong Kong. Since their inception in early May, these ETFs have recorded net outflows of $4.4 million, adding to uncertainty about how developments in the U.S. market may evolve.
Additionally, analysis of centralized exchange data reveals that Ethereum’s market depth is currently approximately 42% below its average levels before the crisis. FTX crash, and concentration in the US market has fallen from 50% to 40% since the beginning of 2023. These figures highlight the changing landscape of Ethereum trading and the broader impacts of regulatory and market changes on accessibility and stability.
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Maxwell is a crypto-economic analyst and Blockchain enthusiast who is passionate about helping people understand the potential of decentralized technology. I write extensively on topics like blockchain, cryptocurrency, tokens, and more for many publications. My goal is to spread knowledge about this revolutionary technology and its effects on economic freedom and social well-being.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.
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