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CCData, formerly known as CryptoCompare, is a data and analytics firm that specializes in providing comprehensive and reliable information about the cryptocurrency market. They gather, analyze, and present data on various digital assets, including prices, trading volumes, market capitalization, and historical performance. CCData offers these insights to individuals, institutions, and businesses to help them make informed decisions regarding cryptocurrency investments, trading strategies, and market analysis. Their services also include the provision of indices, data feeds, and analytics tools, which are essential for understanding market trends and dynamics in the rapidly evolving crypto space.
On July 24, CCData Research published an insightful blog post titled “Into the Ether: Weighing Up the Impact of the ETH ETFs.” The post discusses the significant milestone achieved with the launch of nine spot Ethereum ETFs in the United States on July 23, following a notable shift in the U.S. SEC’s stance in May.
Below are the key highlights from their report.
Key Details of the Launch: The blog outlines that nine spot Ethereum ETF products were approved in the first application round. Notably, Coinbase was selected as the custodian for eight of these nine ETF providers. The trading venues for these ETFs are distributed among major exchanges, with five on the CBOE, three on the New York Stock Exchange (NYSE), and BlackRock iShares Trust on the Nasdaq.
Regarding fee structures, several ETFs have set competitive rates to attract investors. The Franklin Ethereum ETF, VanEck Ethereum ETF, and Bitwise Ethereum ETF have fees of 0.19% and 0.20%, respectively. BlackRock and Fidelity, which also manage the leading Bitcoin ETFs by assets under management (AUM), set their fees at 0.25%. The Grayscale Ethereum Mini Trust, designed to offer lower-priced shares, features the most competitive fee post-waiver at 0.15%.
Fee Waivers and Impact: Six ETF providers have waived all fees for at least six months, while BlackRock’s iShares Ethereum Trust reduced its fees by half for the first year. Invesco Galaxy Ethereum ETF and Grayscale Ethereum Trust chose not to offer initial fee waivers. Despite this, Grayscale’s Ethereum Trust maintains the highest fees at 2.50%, which is 1% higher than its Bitcoin counterpart. However, the introduction of the Grayscale Ethereum Mini Trust is anticipated to mitigate potential outflows.
Market Predictions and Analysis: The post details various industry predictions regarding the inflows and impact of the Ethereum ETFs. Standard Chartered anticipates inflows between $15-45 billion within the first year, while Galaxy Digital estimates that Ethereum ETFs could capture 20-50% of Bitcoin ETF net flows within the first five months. Citi expects Ethereum net inflows to be approximately 30-35% of Bitcoin’s, translating to $4.7-5.4 billion in six months. Kraken’s Head of Strategy, Thomas Perfumo, forecasts monthly inflows of $750 million to $1 billion. Bloomberg’s Senior ETF Analyst, Eric Balchunas, predicts that Ethereum ETFs might gather 10-15% of Bitcoin’s assets, and JP Morgan estimates modest inflows of $1-3 billion by year-end.
CCData’s Prediction: CCData uses the historical distribution of AUM between Bitcoin and Ethereum investment products to predict potential inflows for Ethereum spot ETFs. Based on this distribution, they expect approximately $3.56 billion in inflows over six months, with a projected price impact of around 43%, potentially raising the ETH price to about $4,900. This prediction is conservative compared to others, reflecting a cautious approach based on current data structures.
Factors Influencing Price Sensitivity: The blog also explores the factors that might influence Ethereum’s price sensitivity compared to Bitcoin. These include order book liquidity, deflationary supply due to EIP-1559, and the significant portion of ETH currently staked. The lack of a staking element within the Ethereum Spot ETFs might reduce investor interest since staking provides a yield that isn’t available with spot Bitcoin ETFs.
First Day Trading Insights: On their first day, the nine Ethereum ETFs collectively saw trading volumes of $1.12 billion and net inflows of $106.8 million. BlackRock’s iShares Ethereum Trust ETF and Bitwise Ethereum Trust led in capital inflows, with $266.5 million and $204.0 million, respectively. Grayscale Ethereum Trust experienced outflows of $484.1 million, whereas the Grayscale Ethereum Mini Trust attracted $15.1 million.
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