Grayscale has reportedly transferred $1.01 billion worth of Ethereum to Coinbase Prime in preparation for the launch of Ethereum-based exchange-traded funds (ETFs) in the United States, which have been approved to begin trading today.
Market Speculation and Grayscale’s Strategy
This significant transfer has fueled market speculation about Grayscale potentially reallocating its Ethereum holdings to other cryptocurrencies like Solana. However, Jon Campagna, managing partner at crypto hedge fund Nexyst Digital and former associate at Coinfund and BlackRock, refuted these claims. Campagna stated on X that Grayscale is unlikely to reallocate its Ethereum assets.
Grayscale recently transitioned 10% of its Grayscale Ethereum Trust (ETHE) holdings into a separate Ethereum ETF (ETH) on July 18. This move is part of the preparations for the new fund, which is set to become active, with ETHE holders receiving proportional ETF positions. Despite maintaining a 2.5% fee on ETHE, which is higher than its competitors, Grayscale’s strategy aims to retain more assets under management by offering the lower-cost ETH ticker.
Predictions and Market Impact
Following the SEC approval for spot Ethereum ETFs, algorithmic trading firm Wintermute predicted that demand for these ETFs might be lower than anticipated. However, Matt Hougan, chief investment officer at Bitwise Asset Management, remains optimistic, projecting that Ethereum ETFs could reach $15 billion within the first 18 months of trading.
Grayscale is among several major investment firms, including BlackRock, Fidelity, and Franklin Templeton, preparing to launch Ethereum ETFs. Demand for these funds is projected to be between $3.2 billion and $4 billion.
Grayscale’s significant transfer of Ethereum to Coinbase Prime highlights its preparations for the U.S. debut of Ethereum-based ETFs. While there are mixed predictions about the demand for these ETFs, the entry of major investment firms into this space underscores the growing interest and potential for Ethereum as a significant investment vehicle.
