Grayscale’s Ethereum Trust (ETHE) discount has shrunk to under 10%, its lowest level since 2021, amid growing expectations for approving a spot Ethereum exchange-traded fund (ETF).As of May 21, market data from YCharts shows the ETHE discount rate has narrowed to 6.66%. The “discount” indicates when ETHE shares trade below their net asset value (NAV).ETHE began trading at a discount in early 2021 after Grayscale halted redemptions, reaching nearly 60% in late 2022.However, it started to narrow in 2023 as Grayscale secured significant legal victories against the US Securities and Exchange Commission (SEC) in its bid to convert its Bitcoin trust into an ETF. Since then, the discount has hovered between 10% and 20% before sharply dipping to 6% following recent developments around the Ethereum ETF.What is driving the discount?This week, reports emerged that the US SEC might approve spot Ethereum ETFs, a significant shift from previous expectations.Several ETF applicants swiftly amended their filings with the financial regulator in response. On May 21, Grayscale and other issuers like Fidelity withdrew the staking proposal from their spot Ethereum ETF plans.As a result, market analysts have suggested that the narrowing discount in ETHE was a sign that traders were piling into the product to take advantage of the arbitrage opportunities the discount presented and sell spot if ETHE converts to an ETF.Consequently, experts have cautioned that a Grayscale Ethereum ETF could experience substantial outflows at launch, mirroring the GBTC’s situation. Nic Puckrin, CEO of Coin Bureau, wrote:“Let’s not forget what happened with GBTC post BTC ETF approval. Grayscale’s ETH product holds 2.9m ETH (c. $10bn). This represents about 76% of the total float of ETH investment products globally. This was more than GBTC held prior to BTC ETF approval.”Oluwapelumi values Bitcoin’s potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.Also known as “Akiba,” Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change. Follow us on X for your essential dose of daily crypto news and deep dives.The S-1 filing follows the SEC’s approval of NYSE Arca’s proposed rule change on behalf of ProShares.All spot ETH ETFs have yet to launch despite recent developments.ICBC compared Bitcoin to gold and said Ethereum has established itself as “digital oil” capable of powering myriad applications across the web3 ecosystem.DeFillama data shows the platform’s TVL rose 135% despite the attack.CryptoSlate’s latest market report dives deep into the effects corporate Bitcoin purchases have on the market.Disclaimer: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.
