Chief Investment Officer (CIO) at Bitwise Matt Hougan we recently discussed inflows into the US Spot Ethereum ETFs could attract. In particular, he stated how much could flow into these funds during the first 18 months of their operation.
Ethereum Spot ETF to See $15 Billion in First 18 Months of Trading
Hougan mentioned in note investors that Spot Ethereum ETFs could see net inflows of $15 billion in their first 18 months of operation. He described in detail how he arrived at these numbers to show that they were not just guesses. First, Hougan emphasized market capitalization Bitcoin and Ethereum and said it expects investors to allocate their assets to their respective exchange-traded products (ETPs) in proportion to their market capitalization.
Hougan noted that US investors have invested $56 billion in spot bitcoin ETPs to date, and he expects that number to reach at least $100 billion by the end of 2025, when these funds are expected to mature further and be approved on platforms such as Morgan Stanley and Merrill Lynch.
Using this as a reference, Bitwise’s CIO stated that Spot Ethereum ETFs it would need to attract $35 billion in assets to stay on par with Bitcoin ETFs, which he believes could take about 18 months. Hougan also emphasized that Spot Ethereum ETFs will already have assets worth $10 billion at launch, thanks Grayscale Ethereum Trust (ETHE)which will be transformed into an ETF fund on the day of its premiere.
In this regard, Hougan noted that Ethereum Spot ETFs currently have $25 billion in inflows left to achieve parity with the amount of inflows that Bitcoin Spot ETFs are expected to achieve by the end of 2025. Hougan then highlighted data from international ETP markets to show that investors can allocate ETP funds to Bitcoin and Ethereum roughly in line with their market capitalization.
Using international markets as a reference point
According to Hougan Bitcoin and Ethereum ETPs in Europe they have assets under management (AuM) worth EUR 4,601 and EUR 1,305, representing 78% and 22% of the total available funds in both markets. Similarly, Bitcoin and Ethereum ETPs in Canada are priced at C$4,942 (77%) and C$1,475 (23%), respectively.
Working with Ethereum ETPs market share in CanadaHougan estimated that U.S. Spot Ethereum ETFs could also capture 22% of the U.S. market. On this basis, Hougan lowered his net inflow estimate for Spot Ethereum ETFs from $25 billion to $18 billion, excluding Grayscale assets.
Hougan ultimately lowered his estimate of net inflows to $15 billion, given that much of the inflows to US Bitcoin spot ETFs are related to the carry trade. It removed $10 billion of carry trade-related AuM from the Bitcoin market, lowering its estimate for Bitcoin from $100 billion to $90 billion, and for Spot Ethereum ETFs from $18 billion to $15 billion.
Featured image created with Dall.E, chart from Tradingview.com
