This week, ETH Spot ETFs launched on Tuesday and confirmed that they were a short-term “sell the news” event. ETH fell from over USD 3,550 to just under USD 3,100 before recovering to around USD 3,270. The fall was mainly driven by a sell-off in tech stocks and an oversupply of Grayscale’s high-fee ETHE fund, which saw outflows of over USD 1.15 billion in the first three trading days. Other ETFs could not absorb this demand, resulting in total net outflows of approximately USD 179.1 million over those three days. This mirrors the pattern seen during the launch of the BTC Spot ETF, where significant GBTC selling occurred.
BTC saw strong ETF inflows on Monday (around USD 485.9 million) and remains flat week-on-week after a strong overnight recovery, when it went back to around USD 67,000. Yesterday, it tested the USD 63,500 level, largely influenced by the drag effect of equity markets on crypto markets.
Overall, long-term conditions are very bullish for ETH. However, as long as the Grayscale supply overhang persists, ETH is likely to underperform BTC. This is reflected in ETHBTC trading at 0.0487, a level last crossed when rumours about the ETH ETF launch were confirmed on May 20.
SOLETH and SOLBTC remain in a bullish trend, and unless there is a strong reversal, my bias is that SOL will outperform the majors in the coming weeks.
The 30-day BTC ATM implied volatility increased from 56% to 60% (+4% WoW) and the 30-day ETH ATM implied volatility rose from 64% to 65% (+1% WoW). The 25-delta skew remained positive on all time frames and is now positive on all time frames from both BTC and ETH with a higher skew for BTC than for ETH, which can be attributed to Grayscale outflows suppressing ETH’s move to the upside.
On the macro side, US PMI data was mixed on Wednesday, leading to a continued sell-off of large-cap tech stocks and a general derisking sentiment in equities. The Nasdaq had its worst day since October 2022, closing down 3.7%, as investors rotated out of tech into small caps. After Wednesday’s sell-off, Treasury curves steepened sharply (steepest since October 2023).
On Thursday, US GDP came in higher than expected (2.0% exp, 2.8% actual), despite worse than expected durable goods orders. Traders are now pricing in a 12% chance of two rate cuts and no chance of no rate cuts until the September meeting (compared to a 6% chance of no cuts at the start of the week).
This afternoon, all eyes will be on the US Core PCE figures, which will set the tone for next week’s Federal Reserve meeting. On Saturday, all eyes will be on the Trump speech at BTC Nashville.
Next week will be busy with key economic events: German Preliminary CPI/GDP data, US Consumer Confidence, and JOLTS Job Openings on Tuesday; China Manufacturing PMI and BoJ interest rate decision on Wednesday, FOMC meeting and Fed Interest rate decision also on Wednesday; BoE interest rate decision and US Manufacturing PMI data on Thursday, and NFPs on Friday.
