Spot Ethereum Exchange-Traded Funds are set to debut on July 23, following the SEC’s rule change over two months ago. According to a report by Kaiko, the initial inflows to these Exchange-Traded Funds (ETFs) will most likely affect Ethereum’s ETH price. However, the effect, whether positive or negative, remains uncertain.

“The launch of the futures based ETH ETFs in the US late last year was met with underwhelming demand,” said Will Cai, head of indices at Kaiko. “All eyes are on the spot ETFs’ launch with high hopes on quick asset accumulation. Although a full demand picture may not emerge for several months, ETH price could be sensitive to inflow numbers of the first days.”

Several Ethereum ETFs from BlackRock, Fidelity, Bitwise, VanEck, 21Shares, Invesco, Franklin Templeton, and Grayscale are scheduled to start trading on July 23.

Expectations for Ethereum ETFs

The Ethereum ETFs are expected to begin trading tomorrow. Filings on the SEC site should indicate that the ETFs’ prospectuses have gone “effective,” likely around market close. The influx of money could cause ETH to surge, despite futures-based ETH ETFs receiving a lukewarm reception last year. There is cautious optimism about spot ETFs’ asset accumulation and its impact on ETH price.

ETH prices briefly spiked in May following spot ETF approval but have since trended lower. At $3,500, ETH is facing a crucial supply wall.

Grayscale’s ETH ETF Fees

Grayscale, a prominent crypto player, plans to convert its ETHE trust into a spot ETF and introduce a mini trust seeded with $1 billion from the original fund. Grayscale’s ETHE fee will remain at 2.5%, much higher than its competitors. Most issuers will offer fee waivers to attract investors, with some waiving fees for six months to a year or until assets reach between $500 million and $2.5 billion. This fee war reflects the fierce competition in the ETF market, leading ARK Invest to exit the ETH ETF race.

This echoes Grayscale’s Bitcoin (BTC) ETF strategy, where they maintained high fees despite competitive pressures and sell-offs.

According to Kaiko, Grayscale’s decision to keep its fees high might lead to ETF outflows, leading to sell-off prices, similar to the post-conversion performance of its GBTC. The ETHE discount to net asset value has recently narrowed, indicating traders’ interest in buying ETHE below par to redeem at net asset value post-conversion for profits.

ETH ETF Volatility

Additionally, implied volatility for ETH has surged over the past few weeks due to a failed assassination attempt on Donald Trump and President Joe Biden’s announcement that he won’t run for president again. This reflects traders’ nervousness about the upcoming ETF launch.

According to Kaiko, contracts expiring in late July experienced a rise in volatility from 59% to 67%, indicating the market’s anticipation and potential price sensitivity to initial inflow numbers.

For more updates and insights into the cryptocurrency world, stay tuned to Global Crypto News.

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