Grayscale Ethereum Trust Discount Shrinks to 1%. Will Grayscale Lower Fees for Its Soon-To-Be-Launched Ethereum ETF To Be More Competitive?
Will Grayscale lower fees for its soon-to-be-launched Ethereum ETF to be more competitive?
As noted by ETF analyst Nate Geraci, the Grayscale Ethereum Trust discount has dramatically decreased to 1.45% from a peak of nearly 50% within a year. This significant change is due to the approval of numerous Ethereum exchange-traded funds (ETFs). Just a month ago, the fund was trading at a more than 20% discount to net asset value (NAV). However, the U.S. Securities and Exchange Commission (SEC) surprised many by approving several 19b-4 forms.
SEC's Unexpected Approval
The sudden reversal shocked seasoned market observers who expected the SEC to decline spot Ether ETF filings. This move paved the way for a notable price rally in May. However, it's important to note that these products have not started trading yet since their approval is a two-step process. Now, the SEC must green-light numerous S-1 registration forms. SEC Chair Gary Gensler mentioned that he expects the products to launch this summer, but he did not specify an exact time frame.
Potential Bitcoin ETF Approvals Soon
Geraci recently suggested that the final approval of Bitcoin ETF products could occur as soon as next week. Earlier this week, prospective ETF issuers, including BlackRock, Fidelity, and Grayscale, submitted their updated filings.
Will Grayscale Drop Fees?
Grayscale's GBTC has struggled to compete with other ETFs from major players like BlackRock and Fidelity due to its high fees, which are five times higher than the average fee for other products (0.3%). Despite facing substantial outflows, Grayscale has refused to lower fees for its flagship product.
While some believe Grayscale might consider reducing fees to prevent further outflows, Geraci predicts otherwise. He suggests that Grayscale will conduct the fee war via the Ethereum Mini Trust. Furthermore, Geraci does not expect Grayscale's Ether ETF to see massive outflows: "My guess is decent outflows, but not as bad as we saw with GBTC."
In summary, while there is significant market movement and anticipation around the approval and launch of Ethereum ETFs, it remains uncertain whether Grayscale will lower its fees to stay competitive in this rapidly evolving landscape.
