praxisveritas.io

One of the lessons we learned recently from the German govt sale of Bitcoin is that price need not linearly respond to amount of assets sold. Most of the BTC price decline around this event occurred as relatively small amounts of the 50K were transferred out. 

We can apply this logic to analyzing ETHE, which is currently undergoing a sizable drawdown in assets after spot ETH ETFs started trading. From 2.92 Mln ETH on the eve of ETF conversion to 2.28 Mln as of Friday, the drawdown represents ~22% of assets in ETH terms. 

So far ETH prices have fallen ~10% as this drawdown unfolds, in both USD terms and even more against BTC. While we can't know whether the bulk of the price decline is behind us, it's likely that we see a rapid decline in sensitivity between ETHE asset declines and price changes going forward. This should be true particularly as other spot ETH ETFs are seeing relatively strong inflows since launch.