The Ethereum spot ETF may be officially listed in June. How big is the potential selling pressure on Grayscale?

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

It may be listed in June, and the scale of funds is limited due to the lack of a pledge mechanism

According to Bloomberg ETF analyst James Seyffart, the S-1 approval of the Ethereum spot ETF may be within "a few weeks." It may be completed within a day or may take longer, with the process typically taking up to five months. Judging from the fact that there will be a two-week round of comments on the S-1 amendment filing (similar to the SEC’s feedback for spot Bitcoin ETF applicants), mid-June is certainly possible.

Cobo co-founder Shenyu also posted that referring to the Bitcoin ETF, the S-1 document approval of the Ethereum spot ETF will take at least two weeks, and the normal pace may take 3 months. It is expected that it may be in It passed in early June and started trading in the middle of the month.

Good news about the Ethereum spot ETF is also driving bullish sentiment in the market. According to Coinglass data, ETH spot net outflows have been nearly $130 million in the past seven days, of which exchange net inflows have been negative in the past four days. At the same time, Greeks.live macro researcher Adam posted on the X platform today that 350,000 ETH options are about to expire, with a Put Call Ratio of 0.58, a maximum pain point of US$3,200, and a nominal value of US$1.3 billion. Encouraged by the progress of ETFs, ETH took over BTC's rising short-term option IV, which once reached 150%, much higher than the current IV of BTC over the same period. Looking at large trades and market trading structures, bullish sentiment on ETH remains strong.

However, many giant whales and institutions are currently selling heavily. For example, according to the monitoring of on-chain data analyst ai_9684xtpa, a whale/institution that was short ETH was suspected of selling more than 38,000 ETH that were loaned as collateral to the exchange last night, worth US$93.51 million; MEV trading company Symbolic Capital Partners sold 6,968 ETH yesterday, valued at US$27.38 million; Lookonchain monitored that a whale address panic-sold 7,921 ETH yesterday evening after the ETH price plummeted, valued at US$29.7 million; Spot On Chain monitored, Ethereum Lianchuang Jeffrey reported to Kraken deposited 10,000 ETH, equivalent to approximately $37.38 million.

Compared with the capital scale of Bitcoin spot ETF, the outside world generally believes that the space of Ethereum spot ETF is limited. For example, Bloomberg ETF analyst Eric Balchunas predicts that an Ethereum spot ETF could capture 10% to 15% of the assets acquired by a Bitcoin spot ETF, amounting to $5 billion to $8 billion.

Shenyu said that the main capital inflow in the initial stage of listing between June and December may come from retail investors, accounting for 80 to 90% of the total funds, with less participation from institutional users. Considering that ETHE is similar to GBTC, the market may face some arbitrage and selling pressure, and whether it can withstand this selling pressure remains to be seen. Institutional investors may gradually enter the market after December.

In addition, the cancellation of the pledge mechanism due to compliance requirements is also considered to be one of the important reasons for weakening the demand for spot Ethereum ETF. However, Jeffery Ding, chief analyst at HashKey Group, also predicted that the Ethereum spot ETF is expected to join the pledge mechanism, and the market size is expected to reach 75% of the Bitcoin spot ETF in the medium term.

Grayscale has become a benchmark for the probability of ETF approval, and the selling pressure may be digested by the market

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

In the previous game of anticipation of the listing of Bitcoin spot ETF, the negative premium of Grayscale GBTC has narrowed all the way. Similarly, as market expectations for the approval of the Ethereum spot ETF heat up, investors have also begun to purchase large amounts of discounted shares of Grayscale Ethereum Trust (ETHE) before the official conversion of the ETF. However, unlike GBTC, this optimism It started in the past week.

The Block data shows that since May 17, the trading volume of Grayscale Ethereum Trust (ETHE) has begun to increase significantly, and on May 21, it achieved a trading volume of over US$687 million, setting a record A record high since May 2021. In the month before this, 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 narrowed significantly from 20.52% on May 17 to 7.19% today, while the negative premium rate expanded to 26% last month.

These data also demonstrate 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 a risk. Investors' concerns are not groundless.

In fact, since Grayscale GBTC was successfully converted into a Bitcoin spot ETF, Farside Investors data shows that GBTC has had a cumulative net outflow of US$17.64 billion. It is also the only company with such a high outflow that lasted for nearly 4 months. Outflowed ETFCoinglass data shows that as of May 24, GBTC’s asset management scale was US$19.413 billion.

According to Coinglass data, as of May 24, Grayscale held 2.9352 million ETH, worth more than 11.17 billion US dollars. Although the scale of Grayscale’s Bitcoin far exceeds that of Ethereum, the flight of arbitrage profits and the lack of a pledge mechanism in ETFs are also considered to cause capital outflows.

However, judging from the capital changes of the overall Bitcoin ETF, the capital outflow of this part of GBTC has been completely covered by other ETFs. Farside Investors data shows that as of May 22, Bitcoin spot ETFs still saw net inflows of more than $13.43 billion. And judging from price performance, the current price of Bitcoin is approximately 45% higher than 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 price impact of Grayscale Ethereum ETF on ETH after its launch.

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