Last night, the US Ethereum spot ETF completed its first day of trading, which coincided with the 10th anniversary of Ethereum's first public offering (ICO) on July 22, 2014. A number of POS public chains are expected to gradually integrate into the mainstream financial market. The first-day transaction volume was US$1.083 billion, equivalent to 23% of the first-day transaction of the Ethereum ETF, and the net inflow of funds was US$107 million, equivalent to 16% of the first-day transaction of Ethereum.
The most eye-catching data comes from Grayscale's ETHE, which had a single-day trading volume of $469 million and a single-day net outflow of $484 million. Grayscale ETHE currently has only $8.6 billion in AUM, and today's one-time redemption of more than 400 million is close to the terrifying 5%. Combined with the market performance, such a large number of redemptions is not necessarily a bad thing. It means that the noise in the ETF shares is being cleared quickly. Unless there is another forced liquidation event such as FTX liquidation, the large outflow should not last for a few days. The reasons for the initial large net outflow are similar to those of the Bitcoin ETF at the time:
On the one hand, due to the high management fees, investors redeemed ETHE with a management fee of 2.5% and switched to other ETFs with lower fees. Unlike GBTC, Grayscale split 10% of its net assets to establish a low-fee Ethereum mini ETF (stock code ETH) in the process of converting the Ethereum Trust to an ETF. That is, Grayscale will have two Ethereum ETFs with management fees of 2.5% and 0.15% respectively, in an attempt to alleviate the pressure of moving positions caused by high fees. However, judging from the results of the first day, the mini ETF's attempt to recover liquidity was generally unsatisfactory. Compared with BlackRock's products, the mini ETF market is obviously not very receptive.
On the other hand, there are the previous trust discount arbitrage positions, which took profits after the ETF price was leveled. Before GBTC was converted to ETF, the discount remained at around 20% for a long time, attracting investors to arbitrage by purchasing discounted GBTC and shorting BTC spot at the same time. ETHE was also significantly discounted, with a discount of up to 60% at the end of 2022, but after the news of approval came out in May, the discount had converged to 1%-2% by the end of May, and it even converged to around 0.1% the day before listing; and GBTC's discount rate remained between 5% and 6% on the eve of its conversion to ETF. This time, the ETHE discount converged ahead of schedule, and the outflow pressure caused by the liquidation of discount arbitrage positions is expected to be less than that of GBTC.
Bitwise's ETHW is a dark horse that emerged this time. It attracted $204 million in capital inflows on the first day of trading and announced that it would donate 10% of the Ethereum ETF's profits to the Ethereum Foundation. Strangely, Bitwise's Bitcoin ETF market experienced a rare redemption of $70 million. It seems that it redeemed BTC purposefully and switched to ETH. The Bitcoin market is dominated by BlackRock, and other issuers are trying to grab more market share in the early stage of the Ethereum ETF listing. At the same time, BlackRock's ETHA has the largest inflow, and Fidelity's FETH is also not small and has a large fee reduction. In short, the first-day data performance is actually very impressive, and all major issuers have demonstrated sufficient purchasing power.
What I am more worried about is some off-market factors, the first of which is that Mt. Gox’s coins have begun to enter the hands of creditors. At present, Mt. Gox still has about 80,000 Bitcoins. Since the repayment began in July, as of this afternoon, 62,089 Bitcoins have been confirmed to have been transferred out, accounting for about 44% of the total compensation. This process will continue until October, which means that similar repayment news will continue in the next two to three months, which is an uncertain factor. Although it is difficult to accurately track the whereabouts of these distributed Bitcoins, a simple way is to observe the net flow of Bitcoins on Mt. Gox designated exchanges. The chart below shows that the amount withdrawn from Kraken increased significantly after creditors started receiving Bitcoin, which may be a positive sign that they are not selling, but instead transferring it to cold wallets to continue holding.
Trump will attend the Bitcoin conference this Saturday. Given the crazy "Trump trading" that started with the shooting, this conference seems to be a potential emotional climax. Cryptocurrency has become a bargaining chip in the political game, and no one is sure whether Trump will make some stimulating remarks, especially the rumors about Bitcoin as a treasury reserve. Looking back at the previous four conferences, it is an old tradition that every conference will fall. I wonder if this time will become a bull trap that incites crazy emotions again?
In addition, this week marks the start of the MA7 earnings season. Key macro data including PCE and GDP will also be released in the near future. The most important thing is the interest rate meeting at the end of the month. This is the last interest rate meeting before September. In other words, if the market goes according to expectations, this meeting will definitely reveal some interest rate cut signals. High-risk assets are currently over-bet. Once the expectation of a rate cut in September fails to materialize, small-cap Bitcoin stocks will inevitably be repriced and face a round of harsh leverage liquidation. #比特币大会 #美国以太坊现货ETF开始交易 #财报季
