The Chief Investment Officer (CIO) of Bitwise, Matt Hougan, recently provided insights into the potential inflows that US Spot Ethereum ETFs could attract. His analysis suggests that these funds could potentially receive significant investments in their first 18 months of trading.
Hougan’s analysis is based on the market capitalizations of Bitcoin and Ethereum, with a focus on how investors may allocate their funds to exchange-traded products (ETPs) based on these cryptocurrencies. He highlighted that US investors have already poured $56 billion into Spot Bitcoin ETPs, with expectations for this figure to surpass $100 billion by the end of 2025. Hougan estimated that to match the Bitcoin ETFs’ performance, Spot Ethereum ETFs would need to attract $35 billion in assets, a target achievable within 18 months.
It is worth noting that upon launch, the Spot Ethereum ETFs are anticipated to have $10 billion in assets, courtesy of the Grayscale Ethereum Trust (ETHE) converting to an ETF on the launch day. This initial amount puts the Spot Ethereum ETFs on the path to achieve parity with the expected inflows of the Spot Bitcoin ETFs by the end of 2025.
Hougan delved into data from international ETP markets to draw parallels with potential US market trends. Observations from European and Canadian Bitcoin and Ethereum ETP markets, where investments tend to align with market caps, guided Hougan’s projections for the US market. Drawing insights from Ethereum’s market share in Canada, Hougan suggested that US Spot Ethereum ETFs could capture around 22% of the US market share.
Taking into account the market dynamics and potential investor behavior, Hougan adjusted his estimate for net inflows into the US Spot Ethereum ETFs. Initially pegged at $25 billion, the estimate was revised downwards to $18 billion, excluding Grayscale’s assets. Further considerations, such as carry trades influencing flows into the Spot Bitcoin ETFs, led to a final projected net inflow estimate of $15 billion.
Matt Hougan’s thorough analysis paints a compelling picture of the potential inflows that US Spot Ethereum ETFs could attract in their initial trading period. While the estimates have been adjusted based on various factors, the overall outlook suggests a significant investor interest in these ETFs. As the cryptocurrency market continues to evolve, it will be interesting to see how these projections play out in reality.
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