Ethereum spot ETF first day data interpretation and market forecast: Is it better to cut the stone to find the sword or to rush ahead?

Original | Odaily Planet Daily ( @OdailyChina )

Author｜Nan Zhi ( @Assassin_Malvo )

Last night, the Ethereum spot ETF began its first day of trading after listing. The cumulative trading volume of 9 ETFs on the first day exceeded US$1 billion, which is about 23% of the US$4.6 billion trading volume of the Bitcoin spot ETF on the first day of listing in January this year, with a net inflow of US$106 million.

What are the specific data of Ethereum spot ETF and whether it can follow the trend of Bitcoin spot ETF ? Odaily will summarize the data and market views in this article for analysis.

Ethereum Spot ETF Data

According to data released by Bloomberg ETF analyst Eric Balchunas, the first-day trading volume of the nine ETFs was $1.083 billion (the data disclosed by The Block was $ 1.019 billion), including:

Grayscales ETHE had the highest trading volume, reaching $458 million, accounting for 42% of the total trading volume. In comparison, Grayscales Bitcoin spot ETF GBTC had a trading volume of $2.3 billion on its first day of listing in January, accounting for 50% of the total volume at the time.

The second largest transaction volume was BlackRocks ETHA, which reached $248 million, accounting for 22.9% of the total transaction volume. In comparison, BlackRocks IBITs transaction volume on the first day of listing in January was $1.03 billion, accounting for 22.7% of the total, which is very close.

In terms of net fund flows, the Ethereum spot ETF had a net inflow of $106 million on its first day , which was 17% of the $620 million of the Bitcoin spot ETF on its first day.

Grayscale ETHE had a net outflow of $484 million on the first day, with the main net inflows coming from BlackRocks ETHA of $266 million and Bitwises ETHW of $204 million. From the table below, it can be seen that the degree of balance is not as good as that of Bitcoin spot ETF, and Grayscales outflow is stronger.

Since the launch of the Bitcoin spot ETF several months ago, IBITs net capital inflow has been the core force in resisting the continued selling pressure of Grayscale GBTC . Judging from the first-day data, the ratio of the two is relatively close in terms of both trading volume and net flow, but Grayscale will still dominate in the early stage , and it is possible to replicate the previous trend.

Looking back at Bitcoin’s performance in January

So what was the trend of Bitcoin spot ETF before and after it was approved?

• On January 1, Bitcoin opened at approximately 42,280 USDT;

• On January 11, after the Bitcoin spot ETF was approved, it peaked in the short term, rising to 48,960 USDT, a 15.7% increase on the 11th, and then began to fall under the selling pressure of GBTC, falling 7.6% the next day;

• On January 23, Bitcoin hit a short-term bottom, falling to a low of 38,550 USDT, a 12-day drop of 21.2%, and then began a journey all the way to a new high of 73,777 USDT.

The recent high point occurred the day before yesterday (July 22). According to the highest price and the price 12 hours after the Ethereum ETF trading was opened, BTC fell by 4.2% and ETH fell by 3.7%.

How does the market view the trend of ETH spot ETF after its approval? Is it a case of trying to find a solution by sticking to the old ways or getting ahead of the game?

Market View

Short-term pressure

Most institutions believe that in the early stages after the ETF is approved, the market will go sideways or downward due to the selling pressure of Grayscale ETHE:

• Haseeb Qureshi, managing partner of Dragonfly, wrote that the opening trading volume of the Ethereum spot ETF was very strong, but the price of ETH has not changed significantly. It can be speculated that this is because Grayscales ETHE is mainly selling, which will offset a lot of the capital inflows on the first day.

• Jupiter Zheng, partner at Hashkey Capital Liquid Fund, said that outflows from the Grayscale Ethereum Trust Fund may put pressure on ETH prices after the launch of todays ETF, and may also suppress market sentiment in the short term, but just like the Bitcoin ETF, investors may shift funds to options with lower fees.

• QCP Capitals latest report points out that the markets reaction to the launch of the Ethereum spot ETF is relatively muted, and investors are watching whether a buy hype, sell news pattern will emerge. Influenced by the news from the US government and Mt Gox, the options market seems to expect more downside in the near term. Since the ETH spot ETF may not affect prices immediately, coupled with potential selling pressure from the US government and Mt Gox, spot prices may remain depressed until momentum accumulates before the election.

Options data: IV high, longs slightly stronger

Greeks.live macro researcher Adam wrote that the current ETH doomsday IV has exceeded 80%, significantly higher than the recent average level (60%). From the distribution of transactions, active buying accounts for nearly half of the days trading volume, and Skew is slightly bullish. Todays options market is mainly dominated by bullish forces, and the bullish force is strong. But at the same time, we also see that when the BTC ETF was listed, it fell due to a large amount of selling, so todays bullish force is weaker than when the BTC ETF was listed.

What is also interesting is that todays block trades are mostly concentrated in BTC, with more than 5,000 forward deeply out-of-the-money call options traded. ETH, on the other hand, is concentrated on the market, and market makers are actively adjusting their positions while the market is active.

BRN: Target price $2,800-$3,100

“We recommend maintaining exposure to the positive momentum in the crypto market, but prefer bitcoin over ethereum as we believe the hype and (ETF) inflows are already priced in,” Valentin Fournier, an analyst at digital asset research firm BRN, said in an email. “We expect ethereum to fall to levels between $2,800 and $3,100 before rebounding to $4,000 in September.”

Markus Thielen, founder of 10x Research, expressed a similar sentiment in a newsletter on Tuesday, saying that “investors will take profits once an (ether spot) ETF is launched.”

Ethereum ETF lacks staking rewards, making it less attractive

Investors are more cautious and divided ahead of the launch of an Ethereum ETF in the U.S., in stark contrast to the widespread enthusiasm that preceded the launch of a Bitcoin ETF. A major concern for some investors is that the SEC has excluded the staking mechanism, a key feature on the Ethereum blockchain. Staking enables Ethereum users to earn rewards by locking up their ether to help secure the network. The rewards, or earnings, come in the form of newly issued ether and a portion of the networks transaction fees. As currently structured, the SEC will only allow ETFs to hold regular, uncollateralized ether.

“Institutional investors who are looking at Ethereum know that staking can earn them a yield,” said McClurg, an analyst at CoinShares. “It’s like a bond manager saying, I’m going to buy a bond, but I don’t want to earn interest, which goes against the original intention of buying the bond.” McClurg believes that investors will continue to stake Ethereum outside of the ETF and earn returns, rather than paying fees and holding Ethereum in the ETF.