Grayscale’s ETCO: Ethereum Covered Call ETF for Yield
Grayscale Investments has launched the Ethereum Covered Call ETF (ETCO) on the NYSE Arca, marking its entry into yield-oriented Ethereum products. The Ethereum Covered Call ETF writes covered calls on spot Ethereum trusts—Grayscale Ethereum Trust (ETHE) and Ethereum Mini Trust—collecting biweekly premiums to generate income. ETCO holds at least 80% of its assets in derivatives tied to Ethereum ETPs and began trading with $1.4 m in assets under management. The actively managed ETF targets biweekly distributions and carries a 0.66% expense ratio. By capping upside during rallies, ETCO seeks to deliver consistent yield and mitigate volatility. This launch complements Grayscale’s existing Bitcoin Covered Call ETF and Premium Income ETF, reflecting growing demand for complex income strategies in regulated crypto ETFs.
Neutral
The ETCO launch is unlikely to drive immediate price swings in ETH, as covered call strategies cap upside and distribute income rather than push for rapid gains. In the short term, the product’s debut should have a limited impact on ETH price. Over the long term, increased demand for regulated Ethereum yield products may provide underlying support for ETH by drawing institutional capital into ETPs, but the capped upside feature will temper aggressive price appreciation. Overall, the market impact is balanced between income-focused inflows and limited rally potential, resulting in a neutral stance.