Crypto asset manager Grayscale has made a significant move, transferring $1.01 billion in Ethereum to Coinbase Prime just as Ethereum ETFs gear up for their U.S. trading debut this week.
On Wednesday, Grayscale’s transaction prompted market speculation about a potential sell-off to reinvest in another crypto asset, such as Solana. However, Jon Campagna, managing partner at crypto hedge fund Nexyst Digital and formerly associated with Coinfund and BlackRock, dismissed these claims in a Tuesday post on X. Campagna asserted that Grayscale is unlikely to reallocate its Ethereum holdings.
Grayscale had already shifted 10% of its Grayscale Ethereum Trust (ETHE) holdings into its separate Ethereum ETF (ETH) on July 18, as Campagna explained. The new fund is expected to become active on Wednesday, with ETHE holders receiving their proportional ETF positions.
To facilitate the transition, Grayscale transferred $1 billion, or 10% of their $10 billion assets under management (AUM) in ETHE, to Coinbase Prime. This transfer had been announced a week earlier by Grayscale, Campagna noted.
“What will be interesting is to see the outflows from ETHE as they refuse to lower their fee,” Campagna said. “My guess is those outflows get recycled into inflows into the lower-cost ETFs, like Grayscale’s own 15 basis point fee ETH ticker. Brilliant move by them as they quasi-guarantee more assets stay in-house this way.”
Eric Balchunas, an ETF analyst at Bloomberg, echoed this sentiment in a post on X on July 18. “Grayscale is not lowering at all,” Balchunas wrote. “This means they are ten times higher than the competition.” Grayscale is expected to maintain a 2.5% fee on ETHE.
Meanwhile, algorithmic trading firm Wintermute has indicated that demand for Ethereum ETFs might be lower than expected. Despite this, analysts remain optimistic about their debut on Wednesday.
Matt Hougan, chief investment officer at Bitwise Asset Management, has suggested that Ethereum could reach as high as $5,000, as reported by Decrypt. Ethereum has already begun to move higher, surpassing $3,500 on July 17 after a significant drop earlier in the month.
Grayscale is among several major investment firms, including BlackRock, Fidelity, and Franklin Templeton, preparing to launch Ether ETFs. Analysts project demand for these funds to be between $3.2 billion and $4 billion.
Stay tuned as the Ethereum ETF trading debut unfolds and the market reacts to these significant developments.
