In the first month following the conversion, 23% of GBTC’s assets under management (AUM) flowed out, totaling $6.5 billion. Grayscale’s Ether Trust (ETHE) currently has $11 billion in assets under management. As Kaiko noted, if similar outflows occurred with GBTC, this could result in an average daily outflow of $110 million, representing approximately 30% of Ether’s average daily trading volume on Coinbase. Latest data shows ETHE has been trading at a discount of up to 26% to its net asset value (NAV) in the last three months.

Kaiko researchers emphasized that it is reasonable to expect outflows or buybacks as the discount decreases when the fund converts to a spot ETF. A similar trend was observed with GBTC as the discount to NAV decreased significantly after conversion to ETF. Before the conversion, it was trading at a discount of up to 17% but gradually narrowed over time, allowing investors to move up to the fund’s entry price or higher.

After the Securities and Exchange Commission (SEC) first approved spot Ether ETFs on May 23, ETHE’s discount has already begun to narrow. However, the ETF has not yet started trading as a spot ETF.

Data from YCharts reveals that ETHE’s discount exceeded 25% on May 1 but gradually tapered off throughout the month amid speculation about the SEC potentially approving spot Ether ETFs. By May 24, the discount had reached 1.28%.

Kaiko analysts also noted that GBTC’s outflows were exceeded by inflows into other Bitcoin ETFs by the end of January. They noted that even if initial inflows into Ether ETFs were disappointing in the short term, the approval has significant implications for Ether as an asset and removes some of the regulatory uncertainty that has affected its performance over the past year.

The recent approval of Ethereum ETFs has opened the doors for more crypto investment products, according to research from TD Cowen’s Washington Research Group. While the speed of approval surprised some, the research group viewed it as a foregone conclusion following the approval of Bitcoin ETFs earlier in the year.

Jaret Seiberg from the TD Cowen team said the Ethereum ETF approval came six months earlier than expected but was predictable after the Securities and Exchange Commission (SEC) gave the green light to crypto futures ETFs. Additionally, the approval of spot ETH ETFs potentially confirms Ether’s non-security status, according to industry experts.

As reported, Bloomberg ETF analyst James Seyffart said the approval of these commodity-based fund units implies that the SEC does not explicitly view Ether as a security. Seyffart suggested that this recognition could extend to other tokens and solidify their classification as commodities.