Ether Purchases via Spot ETFs

U.S. investors can now purchase ether through spot exchange-traded funds (ETFs) on the Nasdaq, Chicago Board Options Exchange (CBOE), and New York Stock Exchange.

Concerns Over Grayscale Fees

Hashkey Capital Liquid Fund Partner Jupiter Zheng indicates a potential short-term concern for investors regarding Grayscale Ethereum Trust’s high fees, which might lead to a temporary market downturn.

Zheng noted, “There could be a pushback a little while after the launch of Ethereum spot ETFs; outflows from the Grayscale Ether Trust may dampen market sentiment. Investors may shift their funds to options with lower fees.”

The Grayscale Ethereum Trust ETF (ETHE) has converted from the original Grayscale Ethereum Trust, holding approximately $9 billion in ether.

Absence of Staking Rewards

Zheng also pointed out that the lack of staking rewards could affect demand for spot Ethereum ETFs. Staking offers a significant incentive for holding ether directly, enabling investors to earn rewards.

He mentioned, “While ETFs offer a regulated way for institutional investors to gain exposure to Ethereum, retail investors looking for maximum returns might prefer holding Ethereum directly to benefit from staking rewards.”

However, he added that those looking for staking yields are usually crypto-native and comfortable with self-custody. For investors not interested in direct ownership, these ETFs provide a way to experience asset appreciation without staking yields.

Long-Term Outlook for Ethereum

Despite the potential for a short-term sell-off, Zheng believes Ethereum ETFs will boost long-term demand for ether, providing an accessible entry point for institutional and retail investors who might have avoided participating previously.

Zheng stated, “Our projection is that Ethereum could reach a price range of $6,000 to $10,000 by year-end, representing approximately 1.6x to 2.5x of its 52-week high.”

As of the latest report, the price of ether was relatively stable, trading up 0.3% to $3,496 as of 8:49 a.m. ET, according to The Block’s Price Page.