Grayscale Ethereum Trust (GET) has seen its discount fall to minus 20%, the lowest level since November 2023. This decline coincides with diminishing probabilities of a spot Ethereum exchange-traded fund (ETF) being approved in the US by May.
Spot Ethereum ETF
The 20% discount on Grayscale Ethereum Trust reflects the significantly reduced hopes for a spot Ethereum ETF approval by May. If approved, Grayscale’s Ethereum Trust would convert into a spot ETF, potentially eliminating the discount as seen with its Bitcoin counterpart. However, the falling approval expectations indicate that the transformation of the Grayscale Ethereum Trust may not happen soon.
Analysts who were once optimistic about approval have revised their expectations, with Bloomberg ETF analysts in particular lowering the probability from 70% to 30%, in line with current prediction markets. Bernstein analysts Gautam Chhugani and Mahika Sapra also emphasized the reduced hopes for a US spot Ethereum ETF approval by the critical date of May 23, highlighting the industry’s shift in sentiment.
Despite the pessimism, analysts foresee a 50% chance for the approval of a spot Ethereum ETF later in the year. The industry believes that continued pressure on the US Securities and Exchange Commission (SEC) for approval will be inspired by the success of spot Bitcoin ETFs launched by giants like BlackRock and Fidelity.
Delayed Approval Viewed Positively
Although approval by May seems unlikely, some in the industry view this delay positively. Bitwise Chief Investment Officer Matt Hougan stated that he does not expect spot Ethereum ETFs to be approved by May, suggesting that Wall Street needs time to assimilate the current spot Bitcoin ETFs before focusing on new ones.
Hougan added that a later approval could attract more assets to ETFs and provide additional time for market participants to adapt to and interact with crypto ETFs.
