灰度资深副总裁访谈：所谓的「10点砸盘」不是阴谋，而是ETF新常态

Compiled & Edited by: Odaily

Guest: Krista Lynch (Senior Vice President, Capital Markets, Grayscale Investments)

Host: Bonnie

Original Title: Is Wall Street the Master of Market Manipulation? A Former BlackRock Executive Explains the Truth!

Podcast Source: Bonnie Blockchain

Air Date: May 25, 2026

Editor's Note

The "10 AM sell-off" in Bitcoin ETFs, on-chain wallet movements, and whales transferring tokens into ETFs are not retail investors' imagined "institutional conspiracy." They are the new market structure shaped by NAV pricing, AP creation/redemption, market maker hedging, and in-kind creation/redemption.

This episode features Krista Lynch, Senior Vice President of ETF Capital Markets at Grayscale Investments, who breaks down how the primary market, secondary market, liquidity providers, authorized participants, and custodians work together seamlessly.

In this conversation, Krista Lynch provides a concrete explanation of "institutionalization." Bitcoin ETF bid-ask spreads can be as narrow as one cent, premiums/discounts for some ETFs have converged to single-digit basis points, tokenized assets are moving from stablecoins and equities to more complex RWAs, and an increasing number of whales are swapping on-chain tokens for ETF shares to gain advantages in tax planning, estate planning, margin, and collateral usage.

Key Takeaways

ETF Mechanism & the "10 AM Sell-off"

• "When you see Bitcoin or other tokens moving in and out of our wallets on-chain, many people assume Grayscale is actively buying or selling. But in reality, we are simply responding to end-investor demand, facilitating ETF creations, redemptions, and settlements."
• "ETFs have become a bellwether financial instrument for this asset class. They are no longer just speculative investments; they are also used for institutional investment and hedging."
• "Shorting a Bitcoin ETF doesn't necessarily mean you think Bitcoin is finished. It just means you are expressing a specific investment view through the Bitcoin ETF."
• "Before GBTC converted to an ETF, it lacked primary market functionality. Market makers couldn't keep the share price tightly aligned with the NAV, so discounts or premiums could reach 10% or even 20%, which is very rare in the ETF world."

Authorized Participants, Market Makers, and Perceived Retail "Unfairness"

• "The Authorized Participant (AP) is more of an administrative function. The real brain, the one deciding to create or redeem and driving the entire mechanism, is the ETF market maker."
• "End investors actually benefit from these efficiencies. When you or I buy a Bitcoin ETF, the bid-ask spread is typically just one cent, already near the narrowest possible level."
• "ETF flows and price movements generally move in the same direction, but I wouldn't say one is a leading indicator for the other. If anything, ETF flows seem more like a lagging response to price changes."

Tokenization & the TradFi/DeFi Convergence

• "The biggest theme in my recent conversations isn't price appreciation anymore; it's infrastructure building. This shows the industry is maturing."
• "I see stablecoins as tokenized cash. This will be the first foothold for banks and other traditional financial institutions, paving the way for tokenizing basic assets like US equities."
• "In the most progressive world, we might have a global currency. But I don't think that will happen anytime soon because central banks have very real reasons to control and protect their own monetary systems."

Ethereum Staking, Yields & Liquidity

• "The differentiator for our Ethereum products is that we implemented staking. These products can genuinely generate yield, passing the value from staking on to investors."
• "The hardest part about staking in an ETF isn't earning the yield; it's that the staked assets become illiquid, while the fund must always be ready to fulfill redemptions."
• "We use a mathematical model to dynamically determine how much un-staked assets the fund should hold. We also arrange delayed settlement with liquidity providers, ensuring no disruption is felt by the investor on the front end."

Whales, Next Wave of ETFs & Institutionalization

• "What surprised us was the growing willingness of whales to bring their tokens into ETFs. Converting tokens into shares often unlocks features within US brokerage accounts, like tax planning, estate planning, margin, and collateral."
• "We're past the phase of 'if regulation allows it, we'll do it.' We now have to be more selective, deciding which assets truly merit being brought to market as an ETF."
• "HYPE and BNB are two protocols I'm watching."
• "Bitcoin is becoming more institutionalized. Maybe it's less exciting in some ways, but it also means the asset class is maturing and attracting a whole new set of investors who were previously on the sidelines."

Opening: Starting with the "10 AM Sell-off"

Bonnie (Host): Welcome to the show. Today, we have Krista Lynch, Senior Vice President of ETF Capital Markets at Grayscale Investments, to discuss institutional adoption and the future of tokenization. Krista, welcome to the program. Great to have you.

Krista Lynch: Thanks so much for having me.

Bonnie: I'm really looking forward to this conversation. Let's start with the so-called "10 AM sell-off." There are theories in the market that around 10 AM daily, Bitcoin experiences a 2-3% sell-off, which retail then buys, and it seems tied to Authorized Participants (APs) and ETF issuers. What's your take?

Krista Lynch: I'm aware of these theories on Twitter or X. I can't say I know the exact drivers, but several things are important at that time, mainly related to NAV (Net Asset Value) calculations and key pricing times for other financial instruments. For example, some Bitcoin and other digital asset futures have their values determined at a fixed time, which I believe is London time, corresponding to around 10 AM or 11 AM here. That aligns with the timeline you mentioned.

Another key time is 4 PM US Eastern Time, when these products calculate their NAV. So you see a significant increase in trading activity between 3 PM and 4 PM. We often have to clarify market theories, especially those about Grayscale's products. People see tokens moving in and out of wallets and assume we are buying or selling, but often we are just facilitating settlement. I suspect the "10 AM sell-off" is a similar phenomenon. These times are important for value determination and stimulate significant trading, but they don't necessarily have a deeper, more nefarious meaning.

Bonnie: There's also discussion around ETF flow data. Retail sees inflows and outflows for Bitcoin spot ETFs and immediately says, "Institutions are buying" or "Institutions are selling." But in reality, there are many hedging strategies involved. Can you explain that?

Krista Lynch: Exactly right. When a settlement occurs for our Bitcoin or other digital asset ETFs, you can see Bitcoin or other tokens entering or leaving our wallets on-chain. Many people interpret this as Grayscale actively making buy/sell decisions. However, we are entirely driven by end-investor demand. When investors buy shares, that demand flows down to the AP, who may initiate a creation or redemption.

When a creation or redemption is triggered, my team goes out and buys or sells the corresponding amount of Bitcoin. We are not an actively managed fund that expresses directional views. Our actions are purely driven by market demand.

The hedging aspect you mentioned is also crucial. As ETFs become a financial instrument, or a bellwether for this asset class, they are used not just for speculative investment but also for institutional investment and hedging. You can go long, and you can go short. Shorting doesn't mean you think Bitcoin is finished; it simply means you are expressing a particular investment thesis using the Bitcoin ETF.

GBTC Premium/Discount, Primary & Secondary Markets

Bonnie: When I first started covering this space, Bitcoin ETFs didn't exist yet, and Grayscale's GBTC was the benchmark for institutional exposure through a securitized product. Its premium or discount to NAV was often used as a sentiment indicator. Before we talk about sentiment, can you explain why a premium or discount occurred?

Krista Lynch: Sure. An ETF trades in two markets simultaneously. Investors like you and me buy and sell ETF shares on the secondary market through brokerage accounts like Fidelity or Schwab. But ETFs also trade on an institutional level in the primary market. There, Authorized Participants work directly with ETF market makers to create new shares or remove existing ones from the market.

A premium or discount occurs when the secondary market price diverges from the NAV, i.e., the primary market price. Typically, the AP, or more accurately, the ETF market maker working with the AP, keeps the secondary market price very close to the NAV.

However, before GBTC became an ETF, it lacked primary market functionality. ETF market makers could only access one side of the market, making it impossible to keep the share price tight to the NAV. Why was the market so focused on this premium/discount? It essentially became a sentiment indicator for the market's perceived probability of us winning our lawsuit and converting GBTC to an ETF. The market knew that if GBTC could convert to an ETF, the mechanism would function as designed, and the share price should return to NAV. So, whenever there was significant news, the premium/discount would suddenly narrow or widen, with the market using it to digest the implications for ETF approval odds.

Bonnie: But the Bitcoin market was already very liquid back then. Why didn't arbitrageurs fully eliminate the premium or discount?

Krista Lynch: Now they can. If you look at current Bitcoin ETFs, the premium or discount is typically just a few basis points (bps), very small. But before GBTC could uplist or convert to an ETF, the discount or premium could be 10% or even 20%, which is almost unthinkable for an ETF. The reason was that arbitrageurs couldn't access the primary market; they could only trade in the secondary market. When there is an excess supply of shares in the market with no mechanism to reduce that supply, the price will deviate.

Centralized Exchanges, Liquidity Providers, and the ETF Creation Process

Bonnie: What role do centralized exchanges (CEXs) play in this entire mechanism?

Krista Lynch: They are a very important venue for trading. As I mentioned, when we receive a creation or redemption instruction, we need to buy or sell Bitcoin. At Grayscale, we do some bilateral trading with certain trading firms. However, some issuers rely on exchanges as another venue to source liquidity.

Ultimately, we refer to these entities as liquidity providers. The dealers we trade with are also plugged into this ecosystem. So, whether you are trading directly with a liquidity provider or sourcing liquidity through an exchange, the whole system is symbiotic. Liquidity providers might source tokens from exchanges or provide their own liquidity on exchanges. It all contributes to the very tight pricing that ETFs can achieve.

Bonnie: Can you walk us through the process step-by-step? What happens behind the scenes when I buy a share of a Bitcoin spot ETF?

Krista Lynch: This is my favorite question, and it's what I spend most of my time on. You and other investors are buying the Bitcoin ETF. As demand accumulates, the ETF market maker providing these shares on the backend might end up in a short position. That means it sold you the shares but doesn't necessarily hold them. To cover this short position, it needs to create new shares.

So, it goes to an AP. The AP is an entity with specific licenses that can interact directly with issuers like Grayscale. The ETF market maker packages its short share position and goes to Grayscale through the AP, saying, "I need to create shares to cover the short position I've built."

My team asks how many shares are needed, converts that into a corresponding Bitcoin amount, goes to the market to buy that Bitcoin, and backs those shares with an equivalent amount of Bitcoin. After settlement, the ETF market maker gets the shares via the AP. Meanwhile, you received your shares much earlier. All of this happens behind the scenes. At the end of this lifecycle, the AP delivers the shares to the ETF market maker, who then covers its short position. This cycle of creations and redemptions happens continuously, every single day.

Bonnie: Does this whole process take a day?

Krista Lynch: Settlement typically takes about a day, but the actual trading process is very fast, maybe 5 to 10 minutes. This is by design. We don't want the market to move significantly while the AP is seeking a quote. In a highly liquid market, a single news headline can cause significant volatility, so we execute the trading process very quickly.

Bonnie: Let me follow up on that. Some discussions suggest that some APs are also liquidity providers.

Krista Lynch: That's true.

To be more specific, an AP is technically a US broker-dealer. Many people mistakenly think the AP is the mastermind deciding to create or redeem, but it's more of an administrative function. The real brains are the ETF market makers.

Many large firms that house ETF market makers also have their own crypto trading enterprises. So, it's common for the ETF market maker to send the order through an AP, and when I go out to buy the Bitcoin, the crypto trading desk within the same firm often wins that trade. This is by design from the ETF market maker's perspective because it helps them compress risk. If they are hedging a trade and holding ETF shares, they also want to match the Bitcoin exposure. Winning the Bitcoin trade allows them to merge the risk.

Bonnie: But can you see why retail might perceive this as a bit "unfair"? They feel like you guys are the smart money, and they just can't compete.

Krista Lynch: I understand that perspective, but my counterargument is that the end investor ultimately benefits from the very tight market spreads this system creates. When you or I buy a Bitcoin ETF, the bid-ask spread is typically just one cent. That's about as narrow as it can get, literally single-digit basis point pricing.

This pricing is possible precisely because of the efficiencies that ETF market makers achieve. You and I cannot access the primary market, and I think that's the root of many of these theories. But we benefit because APs have to trade in huge sizes. We, as retail investors, likely won't trade that size, yet we still enjoy the ultra-tight spreads they generate. It's an ecosystem where everyone is trying to achieve the best outcome. Those theories have their origins, but I hope this clarifies things.

Tokenization Growth Amidst Price Declines

Bonnie: Grayscale Research reported that six crypto sectors, including on-chain finance and ETFs, saw negative returns in Q1 and Q2. Meanwhile, tokenization volume grew