Grayscale’s new ETF targets income from Ethereum’s changing tides

As Ethereum ETF outflows persist, Grayscale introduces a creative solution focusing on income-first strategies.

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Grayscale has introduced a new exchange-traded fund that aims to turn Ethereum’s price swings into regular income for investors.

The product, called the Grayscale Ethereum Covered Call ETF (ETCO), launched on Sept. 4 and distributes dividends every two weeks. The firm said ETCO uses a covered call strategy instead of holding ETH directly.

The firm stated that the fund tracks existing Ethereum exchange-traded products, including the Grayscale Ethereum Trust (ETHE) and the Ethereum Mini Trust (ETH), and writes call options on them to capture additional yield.

This structure allows investors to benefit from Ethereum’s volatility while adding an income stream to their portfolios.

Grayscale added:

“By writing call options near spot prices, ETCO prioritizes income generation, making it an income-first strategy that may appeal to investors seeking consistent cash flow and high-yield opportunities. The premiums collected through this approach can also help mitigate the impact of market declines, potentially reducing volatility during downturns.”

Krista Lynch, the company’s senior vice president for ETF capital markets, said the ETF is meant to complement existing ETH exposure rather than replace it. She emphasized that the product reflects Grayscale’s strategy of meeting different investor goals with tailored solutions.

At launch, ETCO reported a net asset value of $35.01 per share, with 40,000 shares outstanding and more than $1.4 million under management.

Ethereum ETF outflows

Grayscale’s new fund comes during a period of weakness for Ethereum-focused ETFs after strong inflows.

According to SoSo Value data, investors pulled $338.25 million from these products over three consecutive sessions, reversing momentum from August when funds saw $3.87 billion in inflows.

Notably, August ranked as the second-strongest of the year, following July’s record $5.43 billion.

Ethereum ETFs remain firmly positive this year despite the latest outflows, with nearly $30 billion in cumulative net inflows since they launched in 2024.

This resilience suggests that institutional demand for ETH exposure continues to grow, even as short-term sentiment shifts.

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