Bitwise CIO Optimistic About Spot Ethereum ETFs: Predicts $15 Billion Inflows
In a major development for the cryptocurrency market, asset managers are eagerly awaiting the green light for new spot Ethereum ETFs from the US Securities and Exchange Commission (SEC). Matt Hougan, the Chief Investment Officer (CIO) at Bitwise, has shared optimistic predictions about these ETFs, envisioning significant inflows into the regulated market shortly after their launch.
Market Data Indicates $15B Demand For Spot Ethereum ETFs
Hougan’s predictions are not based on speculation but on a detailed analysis of existing market data. He foresees $15 billion in net inflows within the first 18 months of trading.
To make this estimate, Hougan compares the market capitalizations of Bitcoin (BTC) and Ethereum (ETH). Currently, Bitcoin’s market cap stands at $1,266 billion, making up 74% of the combined market, while Ethereum’s market cap is $432 billion, accounting for 26%. In the US, investors have around $56 billion invested in spot Bitcoin ETPs, with predictions to hit $100 billion or more by the end of 2025.
Using this $100 billion benchmark, spot Ethereum ETFs would need to draw $35 billion in assets to match Bitcoin proportionally. Factoring in the Grayscale Ethereum Trust (ETHE), which is expected to convert to an ETP with $10 billion in assets, Huogan adjusts his net inflow estimate to around $25 billion.
Analysis Of International ETF Markets
To support his projections, Hougan examines international ETF markets in Europe and Canada, which already offer Bitcoin and Ethereum ETFs. The asset division between these cryptocurrencies in these markets aligns closely with their market capitalizations, reinforcing Hougan's predictions. For example, Bitcoin ETPs account for 78% and Ethereum ETPs represent 22% of total Assets Under Management (AUM).
Hougan also discusses the potential impact of the “carry trade” strategy affecting Bitcoin and Ethereum ETP markets. While Bitcoin ETP flows are significantly driven by this strategy, it is not as profitable for Ethereum. Adjusting for the $10 billion carry-trade-related AUM in the Bitcoin market, Hougan arrives at a conservative estimate of $15 billion in net inflows for Ethereum ETPs.
Conclusion
Hougan believes that a projection of $15 billion in net new demand for spot Ethereum ETFs within the next 18 months is realistic. His analysis considers various market factors and potential adjustments but provides a strong starting point.
Ethereum (ETH) itself has shown resilience, with its price recovering in the last 24 hours. As of the latest figures, ETH is trading at $3,405, marking a nearly 3% increase after dropping to $3,230 on Monday.
Stay tuned for more updates on how these ETFs could transform the crypto market.
