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ETHE Discount Shrinking, ETP Flows Remain Strong

Jul 18, 2023
Author
Sean Farrell
Sean Farrell AC
Market Update Despite underwhelming retail sales data, positive earnings reports are driving equity markets upward. The increase in advance retail sales for June was a mere 0.2% month-over-month, falling below economists' predicted 0.5% increase. Nevertheless, the QQQ index has seen a 60 bps rise, and the SPX index a 52 bps increase. Cryptoassets are diverging from equities, not mirroring the rally spurred by solid earnings. At present, most cryptoassets are on a downward trend, with $BTC dropping below $30k and $ETH below $1.9k. This decline can be partially attributed to the surge in short-term rates and the bounce in the US Dollar Index ($DXY) to back over 100. Amid this landscape, one of the few winners is $SUI, a high-throughput blockchain network that has recently seen an increase in usage, up 8% on the day.As regulatory risks are being reevaluated, the discount for the Grayscale Ethereum Trust ($ETHE) is narrowing, in line with the trend seen with $GBTC. Although there are no current applications for an Ethereum ETF, there is a growing belief that the recent Ripple ruling, which declared XRP as a non-security, suggests that Ethereum would not be treated as a security by the courts. In theory, this development sets the stage for a future Ethereum ETF if sufficient demand e

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