🟣 ETH ETF Season

Issuers making moves into the finish line.

Author

Luke Leasure
July 09, 2024

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Welcome back to 0xResearch. Here's what we’ve got for you today:

  • Sentiment sours at support

  • Jerome Powell Speaks before congress

  • ETF issuers file amended S-1s

  • Pendle’s largest maturity

Majors BTC, ETH, and SOL show a slight bid following the holiday weekend selloff, trading up off their lows 6.6%, 8.6%, and 15%, respectively. Notably, both the ETHBTC and SOLETH pairs have shown short-term strength, as ETF issuers make moves to move forward the ETF approval process. With last week’s major sell-off, sentiment has soured. The Crypto Fear and Greed Index recorded a low of 26, its lowest reading since January, 2023, when Bitcoin was trading around $16K.

Jerome Powell delivered his semiannual monetary policy report to congress this morning, stating that, “we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent. Incoming data for the first quarter of this year did not support such greater confidence.” Currently, Federal Funds Rate futures are pricing 95% odds that the Federal Reserve holds rates at the upcoming July 31st meeting. Both the S&P500 and the Nasdaq continue to make all time highs in advance of Thursday’s CPI print, where consensus expects .1% month-over-month.

All issuers have now resubmitted their amended S-1s for their ETH ETF applications, leaving the ball in the SEC’s court for approval. While most issuers have yet to disclose the fees on their products, VanEck and Galaxy have disclosed fees of .20% and .25%, respectively. Currently, Polymarket is pricing a 91% chance that the ETH ETF begins trading by July 26th, with $17,335 bet.

Last week, Pendle Finance saw its largest maturity to date. The yield trading protocol has been a major beneficiary of the restaking boom and Ethena’s USDe, as it provides a venue for market participants to speculate on and hedge the value of points, airdrops, and yields associated with the underlying instruments. Since the start of 2024, Pendle’s TVL has grown from $230M to over $6.7B. Over $3B came to maturity at the June 26th expiration, with 80% of that comprised by Ether.fi’s eETH, Zircuit’s ezETH, and Puffer’s pufETH.

— Luke Leasure (X: @0xMether)

From modularity to restaking, to the intersection of AI and crypto, to the long-awaited consumer-facing apps to the most recent Bitcoin-related innovations.

We’ll be breaking down all of these and more with the help of a few of the thought leaders in crypto at Permissionless.

ETHE Premium/Discount to NAV

With the ETH ETF on the immediate horizon, the Grayscale Ethereum Trust’s (ETHE) discount to net-asset-value (NAV) has shrunk to near zero, even flipping to a premium during intraday trading. With conversion to an ETF that will allow for redemptions, this nightmare of a product can be put to rest. During the bear, ETHE’s discount to it’s underlying spot holdings fell as low as 60%.

Build on Bitcoin (BOB) marries Bitcoin security with the OP stack to create an EVM environment for Bitcoin applications.

Stablecoins have proven their product-market fit by effectively enabling DeFi as a financial system. Ethena is highly relevant as it strives to disconnect TradFi systems from DeFi and offer a capital efficient crypto-native synthetic dollar. USDe has reached a $3.5 billion TVL in only three months and is now the fourth largest “stablecoin” by market cap.

Plus, what can crypto be optimistic about right now?

Bitcoin has us all glued to the charts. Few likely more so than this year’s freshman class of bitcoin ETF buyers.

The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.