hac dang

[hac dang @metron2321]

@MrBeast 11111111

[hac dang @metron2321]

@strassa2 wow, I haven't heard that name in a while, you just unlocked some buried memories

[Evanss6 @Evan_ss6]

The ETH ETF trade: how I'm thinking about this

There are several key pieces in this trade, some known and some unknown. So will lay some out:

Known(ish):
-It will be approved soon (okay this is not a lock but seems to be the case)
-Grayscale's ETHE has close to 3MM ETH (2.5% of float) that has been trapped for years (GBTC had 626k BTC, 3.2% of float, including a large % that was toxic in BK estates). There will be sell flows from people who were trapped and now get a favorable exit with no discount to NAV.
-there will likely be some marketing / PR push ahead of launch. How hard Fink leans into tech play/tokenization narrative and public appearances is a factor.
-there will be no staking right away. This makes it an ever so slightly worse product. TradFi loves yield. Staking yield is both low and not risk free. But eventually they will want to stake.
-there's no environmental FUD with Ethereum's PoS as there was with Bitcoin's PoW

Unknown:
-how long it will take to launch (could be weeks or months)
-what will be the state of macro (risk on/risk off) when it launches. If SP500 is 5700 vs 5000, that makes a big difference (ES is ~5345 right now, an all time high)
-what the inflows will be (expectations seem low via Balchunas) vs their expectations
-what sorts of flows will issuers such as Blackrock line up for launch? $1B USD into ETH is far more impactful than $1B USD into BTC due to size.
-There is a lot of talk about politics and how crypto is becoming a major election issue. I don't totally buy this. I doubt it's a top 10 issue maybe not even top 25. I don't think it's going to decide PA or WI. There are like 3 states that matter. Let's see I guess.

Among other things

Then the setup. Well, when the BTC spot ETF was approved in January, it was the first of its kind. We didn't have any real example (recent or otherwise) to go on where with this one we will have that availability heuristic. Anyone can observe that BTC grinded up into approval, had one final leg up on approval, and then dumped ~22% before ripping ~100% to new highs.

So the easiest thing to expect is that it will follow a similar fractal. But now that this JUST PLAYED OUT, it's in everyones' recent memory, so maybe it will be different. Anyone who sold the news on BTC approval actually made a bad sell insofar as they didn't scoop their full bag back lower. I suspect this happened to many. This gets even more painful for them if they're trading with taxes.

So what's different here, besides that we have a recent comp this time:
-lower % of float in Grayscale + presumably less toxic
-was priced at ~10% approval into the approval whereas BTC was priced at >90% for some months and 50-70% for some months before that
-macro (maybe). Since we don't know right now how long the S1 process will take, we won't know the macro environment until the time comes.
-everyones' expectations (explained some above)
-how hard this will be sold by Fink/issuers
-whether Vanguard will allow clients to buy, whether JPM is more positive towards it than Bitcoin, and general TradFi reception
-the expectations of flows. Balchunas/Seyffart set expectations pretty high for the Bitcoin ETFs and yet they were still exceeded, shattering all the records for ETF launches. Here the expectations seem to be quite low. Leaves a lot of room to surprise to the upside if they don't update their forecasts. I find their reasoning wholly unconvincing and relish the opportunity to fade this again, like with their "slim to none" approval odds call last week.
-we have some data from HK/Canada exchange traded products. I don't think this is particularly useful but it's also not nothing. We'll see.
-important to note price was ~$3000 yesterday and $3790 as I'm writing this. Take note of that and again what the price is on the day it goes live. If it launches at $3800 that is a lot different than launching at $7000. Important to keep everything in context.

Lots of moving pieces here. Worth keeping a pulse on everything.

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