Ethereum ETF fee wars: Grayscale goes ‘for the jugular,’ drops Mini fees to 0.15%

• Grayscale makes U-turn on Mini Ethereum Trust, drops fees to 0.15%
• Is that enough to minimize the potential ETHE outflows and keep ETH above $3K? 

The 17th of July saw a lot of outrage over Grayscale Ethereum [ETH] ETF’s hefty 2.5% fees, which were 10X higher than its ETHE competitors.

In fact, senior Bloomberg ETF analyst Eric Balchunas had warned that the fees could lead to “outrage outflows” from Grayscale.

Additionally, Grayscale Ethereum Mini Trust, which will be spun off from its ETHE after conversion, had fees pegged at 0.25%, similar to BlackRock, Fidelity and Invesco.

Market observers warned that Grayscale’s move to maintain hefty fees on the ETHE and still fail to undercut fee prices using the Mini Trust was a ‘huge miss’ and a disappointment. 

It seems the issuer has read the market mood and updated its fee structure. 

Grayscale drops Ethereum Mini Trust fees to 0.15%

In an updated S-1 (registrant filing) on Thursday, Grayscale dropped its Mini Trust (ETH) fees from 0.25% to 0.15%, with a full waiver for the first $2 billion, making it the cheapest amongst its peers. 

Source: Bloomberg

Balchunas called the update a “good catch,” noting,  

‘Mini me $ETH fee cut to 15bps (from 25bps yesterday). Officially the cheapest on mkt now. should help cause. Good catch.’

On his part, Nate Geraci of ETF Store, who scolded Grayscale for its earlier hefty fees, also changed his tune and termed the update a “smart move.”

“Bravo, Grayscale…This is how you go for the jugular…Smart move IMO.”

The Mini Trust (ETH) will be a 10% automatic spin-off from the ETHE on 23rd July. As of press time, ETHE had about $10 billion in AUM (assets under management). 

However, the highest fees on the Grayscale Ethereum Trust (ETHE) will remain at 2.5% with no waiver.

But another analyst from Thanefield Capital believes the Mini fee update could reduce ‘outrage outflows’. 

‘It is now the most competitive ETF from a fee-perspective, this will likely avoid AUM leakage from Grayscale and reduce $ETHE outflows. There are rumors the ETHE ->ETH conversion is tax-exempt, which would be even more bullish

Ethereum price action

Source: ETH/USDT, TradingView

On the price chart, ETH consolidated below $3.5K ahead of the ETH ETF final approval and likely launch next week. 

Despite the above-average RSI (Relative Strength Index) reading, which denoted remarkable buying strength, ETH bulls must clear the $3.5K obstacle (red) to eye the $4K level. 

However, if the ETH ETF launch turns out to be a ‘sell the news’ event, then $3.3K and the demand zone, marked in cyan, above $2.9K, would be crucial price levels to consider.