Markets
Grayscale Moves $1B in Ethereum to Coinbase Ahead of US ETF Debut
Cryptocurrency manager Grayscale has moved a significant amount of Ethereum to Coinbase Prime, as exchange-traded funds (ETFs) associated with the cryptocurrency prepare to debut in the United States this week.
Grayscale’s $1.01 billion transaction to Coinbase Prime on Wednesday prompted market participants to suggest that Grayscale may be preparing for a sell-off to reinvest in another cryptocurrency, such as Solana.
Jon Campagna, managing partner of crypto hedge fund Nexyst Digital and previously associated with Coinfund and Blackrock, pushed back on these claims in a Tuesday post on Xstating that Grayscale is unlikely to reallocate its investments in Ethereum.
This comes as Grayscale rolled over 10% of its holdings in the Grayscale Ethereum Trust (ETHE) into its separate Ethereum ETF (ETH) on July 18, Campagna said.
The new fund is expected to go live on Wednesday, with ETHE holders receiving their ETF positions prorated.
To facilitate the move, the asset manager moved $1 billion, or 10% of its $10 billion in ETHE AUM, to Coinbase Prime, as Grayscale had announced a week earlier, Campagna wrote.
“It will be interesting to see the outflows from ETHE, as they refuse to lower their … fee,” Campagna said. “I would imagine those outflows being recycled into inflows into lower-fee ETFs, like Grayscale’s 15bp fee ticker ETH. Brilliant move on their part, as they almost guarantee more assets stay in-house.”
“The grayscale isn’t getting any lower,” Eric Balchunas, an ETF analyst at Bloomberg, wrote in a blog post. X July 18. “That means they are ten times higher than the competition.” Grayscale is expected to maintain a 2.5% fee on ETHE.
While algorithmic trading firm Wintermute has indicated that demand for Ethereum ETFs may be lower than expected, analysts remain optimistic about their debut on Wednesday.
Matt Hougan, chief investment officer at Bitwise Asset Management, said that Ethereum could hit $5,000, Decrypt previously reported.
Ethereum has already started to rise, surpassing $3,500 on July 17, after a significant decline earlier in the month.
Grayscale is one of the major investment firms, including BlackRock, Fidelity and Franklin Templeton, preparing to launch Ether ETFs.
The demand for funding is estimated to be between $3.2 billion and $4 billion.