Exchange-traded funds (ETFs) that are based on Ethereum cash could potentially attract $15 billion in net inflows within the first 18 months, according to Matt Hougan, the chief investment officer of Bitwise. This prediction was made in a recently released report.
Hougan stated in the report, “We don’t need to speculate about the potential demand for Ethereum spot ETPs. We can simply examine the data. Everyone is curious about how much spot ether exchange-traded products (ETPs¹) will attract in net flows. My answer: $15 billion in the first 18 months. This is not a random guess. That’s what the data indicates.”
The report explains that one way to estimate these potential inflows is by considering the relative market caps of the two largest cryptocurrencies. “A good starting point for estimating inflows is to compare the market caps of BTC and ETH. After all, in the absence of any other information, I would expect investors to allocate Bitcoin and Ethereum ETPs roughly in proportion to their market capitalizations.”
Based on the current data, the market values are as follows: Bitcoin: $1.266 billion (74% of the combined market); Ethereum: $432 billion (26% of the combined market).
Currently, US investors have invested $56 billion in Bitcoin ETPs. Hougan estimates that this figure will exceed $100 billion by the end of 2025.
“Using this $100 billion figure as a benchmark, Ethereum spot ETPs would need to attract $35 billion in assets to achieve parity, a process that I anticipate will take around 18 months. However, does this mean we should expect $35 billion in inflows to Ethereum ETPs upon their launch? No. Firstly, the Grayscale Ethereum Trust (NYSE: ETHE) is expected to convert into an ETP on launch day, bringing $10 billion in assets with it. If we exclude that, we would still need $25 billion in inflows to reach parity,” Hougan added.
It is worth noting that Gary Gensler, the president of the SEC, recently shared promising prospects for the future of Ethereum ETFs. Gensler expressed optimistic clarity and indicated that the approval of S1 forms, which are required for the launch of Ethereum ETFs, is expected in the summer. “Individual issuers are currently working through the registration process. It is progressing well. And I would anticipate sometime during this summer,” Gensler said, demonstrating confidence in the current progress.
Disclaimer: The views and opinions expressed by the author or anyone mentioned in this article are for informational purposes only and do not constitute financial, investment, or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.
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