Chief Investment Officer (CIO) at Bitwise Matt Hougan We recently discussed the inflows that the U.S. Spot Ethereum ETFs could attract. Specifically, he stated how much could flow into these funds in the first 18 months of trading.
Spot Ethereum ETFs to Register $15 Billion in First 18 Months of Trading
Hougan mentioned in a observation investors that spot Ethereum ETFs could see $15 billion in net inflows in their first 18 months of trading. He elaborated on how he arrived at these numbers to show that it wasn’t just a hunch. First, Hougan highlighted the market capitalizations of Bitcoin and Ethereum and stated that it expects investors to allocate to their respective exchange-traded products (ETPs) in proportion to their market caps.
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Hougan noted that US investors have so far invested $56 billion in spot Bitcoin ETPs and expects that number to reach $100 billion or more by the end of 2025, by which time these funds should have matured further and be approved on platforms such as Morgan Stanley and Merrill. .
Using this as a reference, the CIO of Bitwise stated that the Spot Ethereum ETFs It would need to attract $35 billion in assets to be on par with Bitcoin ETFs, which he believes could take around 18 months to achieve. Hougan also highlighted that Spot Ethereum ETFs will already have $10 billion in assets at launch, thanks to Ethereum Trust in Grayscale (ETHE)which will be converted into an ETF on launch day.
Therefore, Hougan noted that Spot Ethereum ETFs are now left with $25 billion in inflows to reach parity with the amount of inflows that Spot Bitcoin ETFs are expected to reach by the end of the year 2025. Hougan then highlighted data from the international ETP markets to show that investors may be allocating Bitcoin and Ethereum ETPs roughly in line with their market caps.
Using international markets as a reference point
According to Hougan, ETP Bitcoin and Ethereum in Europe hold €4,601 and €1,305 in assets under management (AuM), which translates into 78% and 22% of the total funds available in both markets. Similarly, Bitcoin and Ethereum ETPs in Canada hold CAD$4,942 (77%) and CAD$1,475 (23%), respectively.
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Working with Ethereum ETP market share in Canada, Hougan estimated that US Spot Ethereum ETFs could also capture 22% of the US market. Based on this, Hougan reduced the estimate of net inflows for Spot Ethereum ETFs from $25 billion to $18 billion, excluding Grayscale assets.
Hougan ended up reducing the estimated net inflows to 15 billion dollars, taking into account the fact that a significant part of the flows to the US Spot Bitcoin ETFs are related to carry trades. He removed $10 billion in carry trade-related AuM from the Bitcoin market, reducing his estimates for Bitcoin from $100 billion to $90 billion and for the Spot Ethereum ETFs from US$18 billion to US$15 billion.
Featured image created with Dall.E, chart from Tradingview.com