Kaiko Research reported on May 27 that while spot Ethereum ETF approvals present potential short-term challenges, they are beneficial for the digital asset's long-term growth. Kaiko's report highlighted that this approval reduces regulatory uncertainty regarding Ethereum's classification as an asset.

Will Cai, Head of Indices at Kaiko, stated that the approval suggests the SEC is treating ETH more as a commodity than a security, implying positive regulatory implications for similar tokens in the U.S.

Despite initial expectations, the SEC approved the ETFs' 19b-4 filings on May 23, with S-1 orders still pending. Spot Ethereum ETFs are expected to launch soon.

Kaiko also suggested that Grayscale’s ETHE fund might face outflows, potentially putting selling pressure on ETH once new funds begin trading. Grayscale’s ETHE, with $11 billion in assets under management, could see $110 million in average daily outflows after ETF trading starts. For comparison, Grayscale’s Bitcoin fund, GBTC, experienced $6.5 billion in outflows, or 23% of its AUM, during its first month as an ETF.

Kaiko also noted that other ETF inflows compensated for GBTC outflows by January's end.

Regarding Hong Kong's ETH ETFs, Kaiko pointed out their "lackluster" launches, indicating uncertainty about the impact of ETHE redemptions. Data from Farside showed Hong Kong's spot ETH ETFs experienced $4.4 million in net outflows since their early May launch.

Finally, Kaiko observed that ETH’s market depth on centralized exchanges is around $226 million, 42% below pre-FTX levels. Additionally, ETH’s concentration on US exchanges has decreased to 40% from 50% in early 2023.