The cryptocurrency market is abuzz with anticipation as the launch of an Ethereum (ETH) ETF approaches. However, one analyst is cautioning against buying ETH before the ETF’s launch due to potential drawbacks revealed by recent fee publications for the Grayscale ETF.
Grayscale’s ETH ETF charges high fees of 2.5%, significantly higher than competitors who charge around 0.12% to 0.25%. With Grayscale holding large ETH holdings worth about $10 billion, these fees generate significant revenue. However, the high fee structure could lead to outflows as investors seek cheaper alternatives, similar to issues seen with Grayscale’s Bitcoin Trust.
Despite this warning, 60% of respondents in a Twitter poll believe that Ethereum’s price will rise 14 days after the ETF launch. Analysts predict that the ETH ETF could attract 10 to 15% of Bitcoin assets, with ETH making up 60% of total assets under management in Hong Kong crypto ETFs.
In the five months since the Bitcoin ETF launched, nine BTC issuers have attracted $37 billion in assets under management. Assuming ETH attracts 15% of that, it would amount to $5.6 billion. Currently, Grayscale holds $11 billion in ETH, and if 53% is sold by trust holders, this would amount to $5.88 billion, close to the predicted inflow.
Overall, the market sentiment remains mixed, with Bitcoin consolidating around the $65,000 level. While the launch of the ETH ETF is highly anticipated, investors should proceed with caution and consider the potential impact of high fees on Grayscale’s ETH ETF before making any investment decisions.
