ETH spot ETF inflow estimates: Will the BTC spot ETF trend repeat?

Author: ASXN Digital Asset Research Company

Translation: xiaozou, Bijie.com

The Ethereum spot ETF will be launched on July 23. There are many aspects of ETH ETF that are not visible in BTC ETF and are easily overlooked by the market.

ETHEOutflow Forecast

ETF The fee structure of ETF is similar to that of BTC ETF. Most ETF providers charge no fees for a specific period in order to better build AUM. As is the case with the BTC ETF, Grayscale has maintained its ETHE fee at 2.5%, an order of magnitude higher than other providers. The key difference here is the introduction of the Grayscale Mini ETH ETF, which had previously applied for a BTC ETF but was not approved.

This mini trust product is a new ETF product launched by Grayscale. The initially disclosed rate is 0.25%, which is similar to other ETF providers. Grayscale’s idea is to take a 2.5% fee from less active ETHE holders while attracting more active, fee-sensitive ETHE holders to their new product without letting the funds flow away Go to lower-fee products like Blackrock’s ETHA ETF. After other providers lowered their fees by 25bps than Grayscale, Grayscale came back by lowering its mini trust fees to 15bps, making it the most competitive product. On top of that, they transferred 10% of ETHE AUM (Assets Under Management) to the mini trust and presented this new ETF to ETHE holders. This conversion is done on the same basis, which means it is not a taxable event.

The corresponding impact is that outflows from ETHE will be more modest as holders transition to this mini trust compared to GBTC.

ETH ETFInflow Forecast

There are many types of valuations when it comes to ETF inflows, and we’ve highlighted some of them below. Normalizing these valuations yields an average valuation of $1 billion/month. Standard Chartered Bank gave the highest valuation of US$2 billion/month, while JP Morgan gave a lower valuation of US$500 million/month.

Luckily, we had help from Hong Kong and European ETPs (Exchange Traded Products), as well as ETHE discount closings, to help us estimate the flow. If we look at the AUM of Hong Kong ETP, we can draw two conclusions:

(1) The relative AUM of BTC and ETH ETP is higher than BTC vs. ETH, with a relative market capitalization of 75:25, while AUM The scale is 85:15.

(2) In these ETPs, the ratio of BTC to ETH is quite constant and consistent with the ratio of BTC market cap to ETH market cap.

In Europe, we have a larger sample size to study – 197 cryptocurrency ETPs with a cumulative AUM of $12 billion. After our data analysis, we found that the breakdown of AUM for European ETPs is roughly consistent with the market cap of Bitcoin and Ethereum. Solana is over-allocated relative to its market cap, at the expense of “other crypto ETPs” (anything other than BTC, ETH, or SOL). Solana aside, a pattern is starting to emerge – the global AUM breakdown between BTC and ETH broadly reflects a market cap-weighted basket.

Considering that GBTC outflow is the origin of the “sell the news” narrative, it is important to consider the possibility of ETHE outflow. In order to simulate potential ETHE outflows and their impact on price, it is necessary to look at the proportion of ETH supply in ETHE.

Once adjusted for Grayscale mini-seed capital (10% of ETHE AUM), the ETH supply ratio as a function of total existing supply in ETHE is similar to GBTC at launch. It’s unclear what the rotation vs. exit ratio is for GBTC outflows, but if we assume a similar ratio of rotation flows to exit flows, then ETHE outflows would have a similar impact on price as GBTC outflows.

Another key piece of information that most people overlook is ETHE’s NAV (Net Asset Value) premium/discount. ETHE has been trading within a 2% range of par value since May 24, while GBTC first traded within a 2% range of net asset value on January 22 (just 11 days after GBTC converted to an ETF). The approval of the spot Bitcoin ETF and its impact on GBTC was slowly reflected in the market, while the ETHE discount for NAV trading was more reflected in the existing narrative of GBTC.

When the ETH ETF is launched, ETHE holders will have 2 months to exit at a price range close to the face price. This is a key variable that will help stop ETHE outflows, especially exit traffic. Internal estimates for

ASXN are 8 billion to 1.2 billion per month. This is calculated by taking a market cap weighted average of monthly Bitcoin inflows and then multiplying by the market cap of ETH.

Our estimates are supported by global cryptocurrency ETP data, which suggests that cap-weighted baskets are the dominant strategy (we may see rotational flows from BTC ETFs adopting similar strategies). Additionally, given the unique dynamics of ETHE trading at par prior to the launch and launch of the mini-trust, we are open to upside surprises in ETH price.

Our estimates of ETF inflows are proportional to their respective market caps, so the impact on prices should be similar. However, it is also important to measure what proportion of the asset is liquid and available for sale - assuming that the smaller the "float ratio", the greater the price response to inflows.

There are two special factors that affect the liquid supply of ETH, namely native staking and supply in smart contracts. As a result, ETH is less liquid and available for sale at a lower percentage than BTC, making it more sensitive to ETF inflows. However, it is worth noting that the liquidity difference between the two assets is not as large as some believe (ETH’s cumulative +-2% order depth is 80% of BTC’s).

Our approximate calculation of liquid supply:

Ethereum Reflexivity

As we look at ETFs, it’s important to understand how reflexive Ethereum is. The mechanism is similar to BTC, but Ethereum’s burning mechanism and the DeFi ecosystem built on top of it make the feedback loop even more powerful.

The reflexive loop looks like this:

ETH flows into ETH ETF → ETH price rises → Interest in ETH rises → DeFi/chain usage rises → DeFi fundamental metrics improve → EIP-1559 burns increase → ETH supply drops → ETH Price rises → More ETH flows into ETH ETF → Interest in ETH rises → ...

One thing missing from the BTC ETF is the lack of a "wealth effect" in the ecosystem. In the emerging Bitcoin ecosystem, we don’t see a lot of revenue being reinvested into base layer projects or protocols. As a "decentralized application store" with a complete ecosystem, Ethereum will benefit from the continued inflow of underlying assets.

We believe that this wealth effect has not received enough attention, especially in DeFi. There is 20 million ETH ($63 billion) in TVL in the Ethereum DeFi protocol, and as ETH trades higher, investment in ETH DeFi becomes increasingly attractive as USD-denominated TVL and revenue surge.

ETH has a reflexivity that does not exist in the Bitcoin ecosystem.

その他の考慮すべき要素

1. BTC ETF から ETH ETF へのローテーション流入はどうなるでしょうか? BTC ETF アロケーターの一部が、仮想通貨の純エクスポージャーを増やすつもりはないが、多様化したいと考えているとします。特に、TradFi 投資家はキャップウェイト戦略を好みます。

2. TradFi は ETH 資産とイーサリアム スマート コントラクト層をどの程度理解していますか?ビットコインの「デジタルゴールド」の物語は理解しやすく、よく知られています。イーサリアムの物語（デジタル経済の決済層、三点資産理論、トークン化など）はどの程度理解されるでしょうか?

3. 以前の市場状況はETHのフローと価格傾向にどのような影響を及ぼしますか?

4. 象牙の塔のエリートたちは、ビットコインとイーサリアムという2つの暗号資産を自分たちの世界への架け橋として指定しました。これらの資産は、ことわざの時代精神を超越しています。スポットETFの立ち上げは、手数料を請求する商品を提供できるようになったTradFiキャピタルアロケーターのETHに対する見方をどのように変えるか。 TradFi の利回りへの渇望により、ステーキングによるイーサリアムのネイティブ利回りはプロバイダーにとって非常に魅力的であり、ETH ETF のステーキングは「いつ」ではなく「もし」の問題であると考えています。プロバイダーは、バックエンドで ETH をステーキングするだけで、通常の ETH ETF 手数料よりも桁違いに多くの手数料を獲得できる商品を無料で提供できます。

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