Ethereum
Bitwise CIO Expects $15 Billion Invested in Spot Ethereum ETFs, How Will ETH React?
Chief Investment Officer (CIO) of Bitwise Matt Hougan recently discussed capital inflows into the United States Spot ETF Ethereum He notably explained how much these funds could attract during their first 18 months of trading.
Spot Ethereum ETFs to Record $15 Billion in First 18 Months of Trading
Hougan mentioned in a note to investors that Spot Ethereum ETFs could see $15 billion in net inflows in their first 18 months of trading. He explained how he arrived at these numbers to show that it was not just a guess. First, Hougan highlighted the market capitalizations of Bitcoin and Ethereum and said it expects investors to invest in their respective exchange traded products (ETPs) in proportion to their market capitalization.
Hougan noted that U.S. investors have, so far, invested $56 billion in Spot Bitcoin ETPs and expect that figure to reach $100 billion or more by the end of 2025, when these Funds should have matured further and been approved on platforms like Morgan Stanley and Merrill. Lynch.
Using this as a reference, the Bitwise CIO said that the Ethereum ETF under the microscope It would need to attract $35 billion in assets to stay on par with Bitcoin ETFs, which he said could take about 18 months. Hougan also highlighted that Spot Ethereum ETFs will already have $10 billion in assets at launch, thanks to the Grayscale Ethereum Trust (ETHE)which will be converted into an ETF on launch day.
Therefore, Hougan noted that Spot Ethereum ETFs now have $25 billion in inflows to reach parity with the amount of inflows Spot Bitcoin ETFs are expected to reach by the end of 2025. Hougan then pointed to data from the international ETP markets to show that investors can invest in Bitcoin and Ethereum ETPs roughly based on their market capitalization.
Using international markets as a reference point
According to Hougan, Bitcoin and Ethereum ETPs In Europe, Bitcoin and Ethereum ETPs hold €4,601 and €1,305 in assets under management (AuM), respectively, which corresponds to 78% and 22% of the total funds available in the two markets. Similarly, Bitcoin and Ethereum ETPs in Canada are at CA$4,942 (77%) and CA$1,475 (23%), respectively.
Working with Ethereum ETP market share in Canada, Hougan estimated that US Spot Ethereum ETFs could also get 22% of the US market. Based on this, Hougan lowered the net inflow estimate for Spot Ethereum ETFs from $25 billion to $18 billion, excluding Grayscale assets.
Hougan ultimately lowered net inflows estimated at $15 billion by taking into account the fact that a significant portion of flows to the US Spot Bitcoin ETF are linked to carry trades. He withdrew $10 billion in carry trade-related assets under management from the Bitcoin market, lowering his estimates for Bitcoin from $100 billion to $90 billion and for Spot ETF Ethereum from $18 billion to $15 billion.
Featured image created with Dall.E, chart from Tradingview.com