The Chief Investment Officer of Bitwise, Matt Hougan, recently shared his insights on the potential inflows that the US Spot Ethereum ETFs could attract. His analysis pointed towards significant figures that could flow into these funds within the first 18 months of trading.
Hougan highlighted the market capitalizations of Bitcoin and Ethereum as a basis for his estimations. He stated that investors are likely to allocate to exchange-traded products (ETPs) in proportion to the market caps of these cryptocurrencies. Building on the $56 billion investment by US investors in Spot Bitcoin ETPs, he projected that this figure could reach $100 billion by the end of 2025 as these funds gain further maturity and approval on platforms like Morgan Stanley and Merrill Lynch.
To stay on par with Bitcoin ETFs, Hougan calculated that the Spot Ethereum ETFs would need to attract $35 billion in assets. With an initial $10 billion in assets from the Grayscale Ethereum Trust (ETHE) conversion on launch day, he deduced that an additional $25 billion in inflows would be necessary within approximately 18 months.
Drawing insights from international ETP markets, Hougan observed that investors tend to allocate to Bitcoin and Ethereum ETPs in alignment with their market caps. For instance, in Europe, Bitcoin and Ethereum ETPs hold significant assets under management (AuM), indicating a proportional allocation pattern. Similarly, the ETP market in Canada reflected similar trends with a clear distribution between Bitcoin and Ethereum assets.
Considering Ethereum’s market share in the Canadian ETP market, Hougan revised his estimate of net inflows for the US Spot Ethereum ETFs to potentially capture around 22% of the US market share. This adjustment led to a lowered projection of net inflows, excluding Grayscale’s assets, from $25 billion to $18 billion. Further adjustments were made by factoring in carry trades, leading to a final estimate of $15 billion in net inflows for the Spot Ethereum ETFs.
Matt Hougan’s analysis provides valuable insights into the potential inflows that the US Spot Ethereum ETFs could attract. By considering market capitalizations, international ETP market data, and estimation adjustments, Hougan presents a comprehensive overview of the projected flows into these funds. As the cryptocurrency market continues to evolve, these estimations serve as a guide for investors and stakeholders looking to understand the dynamics of Ethereum ETF investments.
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