In the early morning of May 24, with the 19B-4 forms of 8 spot Ethereum ETFs approved by the US SEC, it was only a matter of time before they were listed for trading. After the Ethereum spot ETF successfully "passed the test", the price of ETH fell after a brief rise. At the same time, the potential selling pressure of Grayscale, which owns millions of ETH, also caused market concerns.

Grayscale becomes a weathervane for the probability of ETF approval, and the selling pressure may be absorbed by the market

Grayscale is regarded by the outside world as one of the important indicators to measure the probability of ETF approval.

In the previous game of expectations for the listing of Bitcoin spot ETFs, the negative premium of Grayscale GBTC had narrowed all the way. Similarly, as the market's expectations for the approval of Ethereum spot ETFs heat up, investors have also begun to buy a large number of discounted shares of Grayscale Ethereum Trust (ETHE) before the ETF is officially converted, but unlike GBTC, this optimism started in the past week.

Since May 17, the trading volume of Grayscale Ethereum Trust (ETHE) has begun to grow significantly, and on May 21, it achieved a trading volume of over US$687 million, setting a record high since May 2021. In the month before that, ETHE's trading volume was mostly between US$20 million and US$40 million. At the same time, ETHE's discount to its net asset value (NAV) has also narrowed significantly from 20.52% on May 17 to 7.19% today, and the negative premium rate once expanded to 26% last month.

n5a0ih7FN4m8kXpBiexFd6qiBmQBiSC1uwWfb2JW.jpeg

These data also show market confidence to a certain extent. However, once the Ethereum spot ETF is officially listed, Grayscale, which holds a large amount of ETH, is also considered to be at risk of a market crash. Such concerns of investors are not groundless.

In fact, since Grayscale GBTC successfully converted to a Bitcoin spot ETF, Farside Investors data shows that GBTC has accumulated a net outflow of US$17.64 billion, making it the only ETF with such a high outflow and a continuous outflow of funds for nearly 4 months. Coinglass data shows that as of May 24, GBTC's asset management scale is US$19.413 billion

xEy6BHf347JwYQLCvVV7auhBdxqSEeYyUFeMbcOB.jpeg

As of May 24, Grayscale held 2.9352 million ETH, worth more than $11.17 billion. Although Grayscale's Bitcoin holdings far exceed those of Ethereum, the flight of arbitrage profits and the lack of a pledge mechanism for ETFs are also believed to have led to capital outflows.

However, judging from the overall change in Bitcoin ETF funds, the outflow of funds from GBTC has been completely covered by other ETFs. According to Farside Investors data, as of May 22, Bitcoin spot ETFs still had a net inflow of more than $13.43 billion. And from the perspective of price performance, the current price of Bitcoin has risen by about 45% compared to when the ETF was launched.

In other words, although the outflow of funds from GBTC has brought some selling pressure to Bitcoin, it has been absorbed by other Bitcoin ETFs and has not had much impact on the price of Bitcoin. This also has certain reference significance for the impact of the Grayscale Ethereum ETF on the price of ETH after its launch.

Later, I will bring you analysis of leading projects in other tracks. If you are interested, you can click to follow. I will also organize some cutting-edge consulting and project reviews from time to time. Welcome all like-minded people in the cryptocurrency circle to explore together. If you have any questions, you can comment and ask questions