Summary In 2024, Grayscale Ethereum Trust ETF moved from an OTC instrument to one tradable at NAV through AP. This brought strong advantages in terms of NAV anchoring and liquidity (bid/ask spread) compared to the past. But it still remains far too uncompetitive in terms of TER, even compared to Grayscale’s own solutions, such as ETH. September was negative, but I remain positive regarding “Uptober,” especially with the shutdown event. However, participating in a bullish market with the break of a 2.5% TER will fuel the performance price gap versus peers. Do you know Grayscale’s reason for 'Why ETHE ?' “First to trade, long operating history, expert sponsor.” Sounds pretty good, doesn’t it? And I have to admit that, even if it’s a marketing catchphrase, I do recognize Grayscale as the first entity that really tried to connect traditional finance with the crypto market (for better or worse). It did it with Bitcoin, through GBTC, and then with Grayscale Ethereum Trust ETF (ETHE). But if you are now asking me: "are we really sure that to participate in ETH-USD, at this stage, ETHE is still the best solution?" My opinion is no. And now I’ll explain why. But what is ETHE? ETHE is really, for many, a “historical relic” and personally, it brings back “good” memories for me. Calling them “good” is, of course, a bit of an exaggeration, especially considering that it used to be traded OTC and had no creation or redemption program. ETHE - Fund profile (Seeking Alpha) Then, from July 23, 2024, a continuous creation/redemption program became active, and the shares are now tradable at NAV through Authorized Participants. Today it is no longer inefficient : now there's a very small premium (also a sign of demand support), and a negligible bid/ask spread of 0.03% (30 day median). Clearly, this is a sign of excellent liquidity after the uplisting. ETHE - Liquidity Grade (Seeking Alpha) But caution First of all, the ETF label is (in my opinion) a bit misleading, since in reality ETHE does not enjoy the typical protections of a ’40 Act ETF (it does not have the same safeguards as traditional ETFs). In fact, the update, while bringing operational efficiency, left aside some aspects that, in my view, make it less competitive compared to the new solutions on the market: and the first one worth considering is without a doubt the TER, equal to 2.50%. ETHE - Expense Grade (Seeking Alpha) Starting from the premise that both before and after the update, ETHE presented itself as a solution to replicate the spot price of Ethereum net of expenses, one more reflection is needed: if, to cover expenses, the Trust periodically sells ETH, each share progressively represents less Ether over time, this will feed the price gap compared to newly issued ETFs (in a marked way). Competition With the “green light” from the SEC, new ETFs have come, and while ETHE AUM remains all-time high (4.43B), I cannot help but note that Grayscale “houses in-house” another ((REAL)) ETF, which is much more convenient: ETH (which I’ve rated already here ). ETHE - ETH: profile (Seeking Alpha) Well, a solution still from Grayscale, but with a distinctive trait that in the long term will bring an advantage in terms of performance and replicability of the underlying: lower fees, since ETH has an expense ratio of 0.15%. And I emphasize this discrepancy, also pointing out how, despite this clear difference, ETHE’s AUM is still greater than that of ETH. The switch October 2025 marks a trend reversal compared to September. In my opinion, this inversion finds its explanation in the U.S. government shutdown. Why? Well, because, from a certain point of view, while the government stops and there are fears that the Fed may have to move blindly, the blockchain, without a central authority, keeps working; this, in my view, communicates a very strong message, a difference we often forget: blockchain is decentralization. And this reinforces the bullish sentiment in the market. BTC-USD; ETH-USD-Chart (Seeking Alpha) Now, the question is this: could this be a good time for the switch? I won’t take a position on this choice, because I am not a tax advisor. But I know that running into taxation for a simple switch could act as a handbrake on the strong compounding that had been built up on ETHE after these rallies. But in my honest opinion, the same would also be true of remaining exposed to ETHE with a 2.5% fee. Risk Those who are not familiar with the underlying (ETH-USD) must know that ETH is more fragile than BTC: the reaction to sentiment shocks and institutional outflows is typically more violent. And this is a fact that always concerns me a lot, especially after a strong wave of rallies. It must be said that ETH has clearly outperformed BTC in 2025, and I have listed the reasons here. But these volume swings also make ETHE’s price action potentially less solid, amplifying the extent of any negative contraction in case of a sudden sentiment reversal. In this sense, technical study helps me. Here's what I notice: A signal of strength would come from the breakout of the 200-day MA on the 1D timeframe, where the price is currently sitting. A support signal has already occurred when the ETH-USD price reacted positively to the 30-point threshold on the 14-period RSI (1D). ETH-USD: Chart (Seeking Alpha) Conclusion To conclude, I remain bullish on ETHE’s underlying, but I think the market offers much more competitive solutions, and you don’t have to look far to find them: ETH itself, within Grayscale, provides the advantage of a more competitive TER, which in the long term will likely translate into outperformance. The decision to switch is personal, and I cannot replace anyone in this choice. Simply, I am a financial analyst, not a tax advisor. That said, I still keep an eye on key technical support levels, considering ETH’s perhaps “too strong” rise in 2025.
