Right now BOXX ETF is operating in a gray area to reclassify short term capital gains into long term capital gains.
If the IRS makes a ruling disqualifying the treatment of gains on BOXX as long term capital gains and recategorizes the gains to short term capital gains at either the fund or investor level, I think it's safe to assume overnight the fund would be sold heavily and AUM would drop drastically.
If the AUM drops sharply, would the price of the ETF drop at all? Or would bid ask spread widen temporarily and eventually even back out, but the underlying value of the ETF would not change from pre IRS announcement levels even if the AUM drops from (for example) $12 billion to $5 billion overnight?