According to data from Farside Investors, on July 19, the net inflow into the U.S. Ethereum spot ETF reached as high as $402.5 million, with BlackRock's ETHA net inflow being $394.9 million, showing strong interest from investors in Ethereum assets.
With the Ethereum ETF expected to officially launch on July 23, this article will delve into the potential impact of the ETF on the Ethereum market and future trends.
The fee structure of Ethereum ETFs and innovative products
The fee structure of Ethereum ETFs is similar to that of Bitcoin ETFs, with most providers waiving fees for a certain period to attract asset management growth.
It is worth noting that Grayscale has launched a brand new 'mini ETH ETF' with fees of only 0.25%, far lower than the high fees of 2.5% for its traditional ETHE products.
This move aims to guide fee-sensitive investors from high-fee products to more competitive mini ETFs, avoiding capital outflow.
Additionally, Grayscale has transferred 10% of ETHE assets to the mini ETF and gifted it to ETHE holders at no cost; this operation is not a taxable event and helps alleviate the outflow pressure on ETHE.
Analysis of capital inflow scale and liquidity
Multiple institutions have predicted the capital inflow scale for Ethereum ETFs, averaging about $1 billion per month, with Standard Chartered's highest estimate reaching $2 billion, while JPMorgan predicts about $500 million.
By analyzing the cryptocurrency trading products (ETP) data in Hong Kong and Europe, it is found that the asset management scale ratio of BTC to ETH roughly corresponds to their market value ratio, indicating a relatively balanced market allocation between the two.
It is noteworthy that the trading price of ETHE has remained within a 2% premium/discount range relative to net asset value (NAV) since May 24, showing that market valuation of ETHE is relatively stable.
In contrast, Bitcoin's GBTC product experienced larger discount fluctuations before its transformation into an ETF.
Ethereum's unique reflexivity and ecosystem advantages
The launch of the Ethereum ETF not only brings capital inflow but also activates Ethereum's unique reflexive mechanism:
Capital inflows into ETFs drive up ETH prices
Price increases stimulate market interest in Ethereum
Increased activity in the DeFi ecosystem and higher on-chain usage
The EIP-1559 burning mechanism accelerates the reduction of ETH supply
Reduced supply further drives up ETH prices
Creating a virtuous cycle that attracts more capital inflow
This feedback loop is something that Bitcoin ETFs do not possess. As a 'decentralized application store', Ethereum has a vast DeFi ecosystem, with ETH currently locked in DeFi protocols reaching up to 20 million (approximately $63 billion). As prices rise, the total locked value and income of DeFi will also grow, further enhancing ETH's attractiveness.
Traditional financial perspectives and future outlook
Traditional financial investors are more familiar with Bitcoin's positioning as 'digital gold', while the value recognition of Ethereum as a smart contract platform is still gradually improving.
The launch of the spot ETF provides traditional capital with a more convenient investment tool, which is expected to promote further capital inflow into the ETH market.
In addition, the potential for staking ETH to earn native rewards is immense. In the future, the launch of staking ETH ETFs is almost an inevitable trend, allowing investors to not only enjoy capital gains from price increases but also to receive stable staking rewards, which will greatly enhance the attractiveness of Ethereum assets.
The launch of the Ethereum spot ETF marks an important step in the integration of traditional finance and crypto assets. With continued capital inflow, increased ecosystem activity, and the launch of innovative products, Ethereum is expected to enter a new growth cycle.
