Asset managers are occupied getting ready for the launch of new spot Ethereum ETFs, which would be a significant event for the cryptocurrency market if the US Securities and Exchange Commission (SEC) gives their approval.
Chief Investment Officer (CIO) at Bitwise, Matt Hougan, has talked about how these ETFs might affect things. He predicts that a lot of funds will come into the regulated market soon after trading starts.
Hougan’s predictions are based on a careful examination of the available data, not on guesses or speculations. He predicts that there will be net inflows of about $15 billion during the first 18 months, comparing the market caps of Bitcoin and Ethereum.
Bitcoin has the largest market cap right now, at $1.266 trillion, making up 74% of the whole market. Ethereum comes in second, with $432 billion, making up 26%.
ETF Investment Projections
About $56 billion has already been invested in spot Bitcoin ETPs by US investors. This led Hougan to predict that this amount could grow to $100 billion by the end of 2025 as these ETFs mature and get approval from prominent platforms like Morgan Stanley and Merrill Lynch.
Hougan thinks that spot Ethereum ETFs would need to bring in $35 billion in assets in order to hit parity. He thinks that this goal can be reached in 18 months, since the Grayscale Ethereum Trust (ETHE) will be turned into an ETP on launch day, which will bring in $10 billion.
Hougan’s estimates are supported by data from the foreign ETF markets in Europe and Canada. These markets show that Bitcoin ETPs make up about 78% of all Assets Under Management (AUM), while Ethereum ETPs make up about 22%, which is very close to how market caps are distributed.
As he thinks about the “carry trade,” he notices that it works well for Bitcoin ETPs but not so much for Ethereum ETPs in the institutional market. Taking these things into account, Hougan’s projection is now $15 billion in net inflows for Ethereum ETPs.
Hougan says that a modest estimate of $15 billion in net new demand for spot Ethereum ETFs over the next 18 months is likely, even though he knows that there are many factors that could affect the results.
ETH was trading at $3,405 as of the most recent report. This is up almost 3% in the last 24 hours, since it hit a low point of $3,230 on Monday.
