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Spot ETH ETF

The first week of spot ETH ETF trading looked like BTC spot ETF launch déjà vu all over again, with ETH retracing from 3563 highs to 3086 lows.

Why the repeat?

  1. The hefty 2.5% fee by Grayscale once again continues to drive the outflow. To date, we have had 178m USD net outflows from the 8 ETFs with Grayscale accounting for 1.16b worth in just 4 days.
  2. Despite Grayscale introducing a Mini ETF (ETH) with the most competitive fee of 0.15%, net outflows continue to dominate with only 10% of the initial ETHE being converted to ETH.
  3. ⁠Crypto market pulling the classic ‘buy the hype sell the news’. Over positioning into an event and rushing out when there’s a lack of positive reaction.

What’s preventing a post-ETF rally?

  1. Unlike BTC’s digital gold tagline, ETH can be quite an abstract concept to the TradFi world and requires time for further uptake.
  2. ⁠Investors are less incentivized to buy spot ETH ETFs without the staking feature.

Options Market

Ironically, BTC stole the limelight in the options market this week instead of ETH with all eyes on Trump’s speech Bitcoin 2024 this Sunday.

After experiencing the “Trump Effect” last weekend, the options market is expecting huge fireworks with implied vols for 28-Jul being priced at 85 vols, almost double the realized vols.

The options desk saw huge topside positioning by big funds for 2-Aug expiry throughout the week, in anticipation of a breakout move by Trump as well as dovish FOMC next Tuesday.

Trade Ideas

a) Bullish – The Trump Card

Make 701.9% p.a. returns if BTC expires at 72k next Friday (2-Aug).

  • Expiry: 2 Aug 24
  • Sell 1x BTC 65k Put
  • Buy 3.75x BTC 70/72/74k Call Fly
  • Cost: Zero
  • Max Return: 701.9% p.a. or $7,500 USD per BTC if spot expires AT 72k
  • Downside: At expiry, if spot is below 65,000, you buy BTC at 65,000

b) Bearish – Sell The News

Make 3x returns if BTC expires between 65k and 63k

  • Expiry: 2 Aug 24
  • Range: 65k to 63k
  • Payout: 3x (of premiums spent, if BTC expires within the range)

(Spot Ref: 68,000)

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Disclosure: The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.