The Chief Investment Officer (CIO) of Bitwise, Matt Hougan, recently shared some insights on the potential inflows that the US Spot Ethereum ETFs could attract. His estimated figures and calculations shed light on the possible scenario that could unfold in the upcoming months.
Hougan mentioned in a note to investors that the Spot Ethereum ETFs could potentially see $15 billion in net inflows within their first 18 months of trading. This projection was based on a thorough analysis of market capitalizations and investor behavior in the ETP markets.
To arrive at his estimates, Hougan compared the market capitalizations of Bitcoin and Ethereum, expecting investors to allocate funds to their respective ETPs in proportion to these market caps. He highlighted the significant investments made by US investors in Spot Bitcoin ETPs, amounting to $56 billion, and anticipated this figure to reach $100 billion or more by 2025.
Hougan emphasized that for the Spot Ethereum ETFs to compete with the Bitcoin ETFs, they would need to attract around $35 billion in assets, which could take approximately 18 months to achieve. He pointed out that the Grayscale Ethereum Trust (ETHE) would contribute $10 billion in assets upon conversion to an ETF on the launch day.
Drawing parallels from the international ETP markets, particularly in Europe and Canada, where Bitcoin and Ethereum ETPs hold a significant share of assets under management (AuM), Hougan estimated a similar pattern for the US market. Based on this analysis, he revised his net inflow estimate for the Spot Ethereum ETFs from $25 billion to $18 billion, excluding Grayscale’s assets.
Taking into account the impact of carry trades on the flows into the US Spot Bitcoin ETFs, Hougan decided to further lower the estimated net inflows for the Spot Ethereum ETFs to $15 billion. This adjustment reflected a more cautious approach considering the potential market dynamics and investor behavior.
While the projections for the US Spot Ethereum ETFs seem promising, it is essential to consider various factors that could influence the actual inflows and market performance. Hougan’s analysis provides valuable insights into the potential growth trajectory of these ETFs, but uncertainties in the market always pose risks that need to be carefully evaluated. Investors and stakeholders should remain vigilant and adapt their strategies based on evolving market conditions to capitalize on the opportunities presented by the emerging asset class of digital currencies.
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