Ethereum
Ethereum ETFs expected to attract billions to US markets
The long-awaited arrival of Ethereum-based exchange-traded funds (ETFs) that can directly hold Ethereum (ETH) is fast approaching in the United States.
According to a report from crypto analytics firm K33 Research, these ETFs could attract an impressive $4 billion in inflows within the first five months of their launch. The report reads:
Markets remain limited with low volatility, but moderate enthusiasm for ETH ETFs is reflected in trader positioning.
K33 Research based its forecast on a comparison of assets under management in existing ETH-based exchange-traded products (ETPs) globally and similar Bitcoin (BTC) products. The report also considers open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), a market popular with institutional investors.
Currently, Ethereum’s OI on CME is 23% of the size of BTC futures. However, since the introduction of ETH futures on CME in 2021, the average share of BTC futures has been maintained at 35%, indicating significant institutional demand for ETH in the United States.
A healthy capital injection
Applying these ratios to the nearly $14 billion inflows into BTC spot ETF So far, K33 estimates that ETH ETF inflows could be between $3 billion and $4.8 billion in the first five months. It is slightly higher than JPMorgan’s $3 billion forecast for this year.
Based on current prices, this influx would be equivalent to accumulating 800,000 to 1.26 million ETH in ETFs, representing approximately 0.7% to 1.05% of the total token supply. Since spot ETF issuers will need to purchase tokens in the spot market when investors purchase ETF shares, this could create a shortage of supply for the asset.
Vetle Lunde, senior analyst at K33 Research, believes that this “monumental supply absorption shock should lead to ETH price appreciation,” similar to the nearly 60% rise in Bitcoin prices following the introduction of spot ETFs in the United States. K33 analysts predict that with the launch of Ethereum ETFs, the price of ETH will begin to outperform BTC after almost two and a half years of the ETH-BTC pair trending downward.
Last month, the U.S. Securities and Exchange Commission (SEC) Key Deposits Unexpectedly Approved for Spot ETH ETFspaving the way for their trade in the United States. Market watchers expect ETFs to begin trading as early as late June or early July.