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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:

• A by-the-numbers look at days 1-3 of US spot ETH ETF trading.

• Hello from Nashville: Casey Wagner details the initial vibes of Bitcoin 2024.

• Let’s talk the PCE numbers drop, and other data points you might have missed.

Make it make sense: The ETH ETF debut

US spot ether ETFs now have a three-day track record, and the net flow number (in the red) may be a head-scratcher to those not as familiar with the dynamics at play.

A deeper look at the first three days of ETH fund category flow data may offer some clarity, but of course this remains an early-going snapshot. Note: In parentheses are the negative figures posted by Grayscale’s higher-priced Ethereum Trust ETF (ETHE).  

• Day 1 (July 23): +$107 million (ETHE, -$484 million)

• Day 2: -$133 million (ETHE, -$327 million)

• Day 3: -$152 million (ETHE, -$346 million)

And here’s the US spot BTC fund segment’s flow totals early on (with the Grayscale Bitcoin Trust ETF, or GBTC, separated).

• Day 1 (Jan. 11): +$655 million (GBTC, -$95 million)

• Day 2: +$203 million (GBTC, -$484 million)

• Day 3: -$52.7 million (GBTC, -$594 million)

Quickly comparing the initial three-day totals for the spot ETH and BTC offerings, we get:

• ETH ETFs: -$179 million

• BTC ETFs: +$806 million   

If we add up the outflows from ETHE and GBTC in their first three days on the market, they are nearly identical, at just under $1.2 billion. Industry watchers expected large outflows from the Grayscale products — given these were pre-existing trusts with sizable asset bases and price points well above those of their ETF peers.

CoinShares research head James Butterfill told Blockworks in an email he does not believe the three-day ETH ETF outflow total — driven by ETHE — should be viewed negatively.

“It likely represents a mix of clients taking profits for the first time in many years and switching to cheaper products,” he noted. “We expect the inflows from the newly issued ETFs to gradually surpass the outflows from the closed-end Grayscale fund.”

The spot ether ETFs are launching during the summer, when trading activity is historically lower. Still, the funds saw trading volumes of roughly $1.1 billion on their opening day Tuesday — about a quarter of the $4.6 billion in volumes spot BTC funds saw on their Jan. 11 debut.  

Want another interesting stat? The ETH and BTC funds of inflow-leader BlackRock welcomed $355 million and $710 million, respectively, in the first three days of trading. 

So the iShares Ethereum Trust’s initial inflows (for three days) represent exactly half those of its BTC equivalent. That’s above several estimates that the broader ETH ETF category would see about 30% of the inflows reeled in by BTC funds.

How about ether’s price amid the launch? ETH is down about 8% from five days ago. 

That price response is consistent with the sell-the-news event seen for BTC after bitcoin ETFs launched in January, noted Bitfinex derivatives head Jag Kooner.

He added: “As the market evolves and more TradFi investors become familiar with Ethereum's potential, the dynamics could shift, potentially increasing ETH ETF inflows and impacting its price more significantly in the long run.”

— Ben Strack

The value of the State of Michigan Retirement System’s allocation to the Ark 21Shares Bitcoin ETF, according to a Friday filing. 

This disclosure comes after Wisconsin’s investment board revealed in May that it held roughly $160 million worth of bitcoin fund shares.

Jersey City Mayor Steven Fulop said in a Thursday X post that the city’s pension fund was set to follow Wisconsin in allocating an unspecified percentage of its assets to bitcoin ETFs. 

“It will be completed by [the] end of the summer,” he noted, adding: “I’m sure eventually it will be more common.”

The institutions are here and they're coming to Permissionless.

Everyone doubles down on crypto from traditional banks to crypto-native VC funds.

Don’t miss this chance, ticket prices will increase again soon.

Hello from Nashville! 

It’s been an eventful 36 hours. Stay tuned for lots of conference coverage and a full event recap on Blockworks.co next week. But for now, here’s a quick update on day one of Bitcoin 2024. 

The big event yesterday was “the fight” — a karate combat battle sponsored by Bonk and Influencer Fight Club featuring a headliner mashup of Nic Carter and Coty Kuhn. You truly can’t make this stuff up. 

If you’re like me and learning about karate combat for the first time, it’s basically full-contact karate. There is a ref, yes. Though his purpose was not immediately clear given I never actually saw him make a call (save for choosing a winner at the end). 

There was lots of live betting, heckling from the audience and — shocker — no line for the women’s restroom. 

The real headliner though may have been presidential hopeful RFK Jr., who spent most of the evening posing for selfies and flashing a classic faux-bashful Kennedy smile when the crowd periodically burst into “RFK!” chants. 

Also present was Hailey Welch, perhaps better known as “hawk tuah girl.” Welch made the rounds, snapped a picture with Kennedy and live-streamed the whole thing. It’s unclear whether she knew and/or cared about the event’s connection to the Bitcoin conference. 

A handful of blond children ran around the VIP section, pausing to tackle each other on a mat set up outside the ring — presumably mimicking the moves they’d seen inside.

“Kennedy kids,” a bartender told me, nodding toward some not-so-secret Secret Service agents nearby. “Cute, right?”

— Casey Wagner

Happy Friday! We are just days away from the next FOMC meeting. Though central bankers are expected to again hold interest rates steady, let’s review the latest data and what it tells us about September rate cut odds. 

• The PCE — the Fed’s preferred inflation gauge — came out this morning, showing prices rose 0.1% month-over-month in June and 2.5% from a year ago. Core PCE, which excludes food and energy prices, showed a 0.2% monthly and 2.6% annual increase. This was in line with analyst expectations. The report should set up FOMC members for a September rate cut, which markets now say has an 87% chance of happening, according to CME Group data. 

• Initial jobless claims fell more than expected, which could complicate September rate-cut likelihood. In all, 235,000 people filed for unemployment benefits last week, coming in lower than the anticipated 245,000. Had claims surged, the Fed would likely cut more aggressively. It’s worth noting that July’s national holiday (and more generally it being a summer month) tends to skew its data, so take it with a grain of salt. 

• As we mentioned yesterday, Q2 GDP grew an estimated 2.8% year-over-year, the Bureau of Economic Analysis reported. This blows the expected 2% mark out of the water. The reading is also much higher than the first quarter’s figure of 1.4%. Still, growth isn’t too hot, which bodes well for a September rate cut.

— Casey Wagner

• Jan van Eck doesn’t follow the traditional approach of allocating only a small portion of one’s wealth (or none at all) to crypto. The VanEck CEO said at Nashville’s Bitcoin 2024 that BTC represents “way over 30%” of his portfolio. 

• Speaking of Bitcoin 2024, former President Donald Trump is slated to give a keynote address there on Saturday afternoon. Blockworks senior reporter Casey Wagner is on-site to cover the event. Blockworks.co will be the place to go for event-related updates.   

• As of 2 pm ET on Friday, BTC was trading at approximately $67,400, reflecting a 2.4% increase over the past 24 hours. Bitcoin’s price is also more than 5% higher than it was a week ago, and up 9% over the past month. Net inflows into US spot bitcoin ETFs this week (excluding today) total $484 million.