Spot Ethereum ETFs Set to Attract $15 Billion in First 18 Months: Insights from Bitwise CIO

• Bitwise’s Chief Investment Officer (CIO) Matt Hougan recently shared insights on the potential market inflows for US Spot Ethereum ETFs.
• He provided detailed estimates and explained the factors contributing to his predictions.
• Hougan forecasted that these ETFs could see significant capital investments within the first year and a half.

Discover how US Spot Ethereum ETFs could attract substantial investments and what this means for the market.

Spot Ethereum ETFs Expected to Garner $15 Billion in 18 Months

Matt Hougan, in his analysis to investors, projected that US Spot Ethereum ETFs could accumulate $15 billion in net inflows within their initial 18 months of trading. He based his projection on the market dynamics of Bitcoin and Ethereum, highlighting the relative market caps and anticipated investment allocations in their respective exchange-traded products (ETPs).

Hougan emphasized that US investors have thus far injected $56 billion into Spot Bitcoin ETPs, with expectations to surpass $100 billion by the end of 2025. This projection takes into account the increasing acceptance and approval of these products on major financial platforms such as Morgan Stanley and Merrill Lynch.

From this standpoint, Hougan suggested that for Spot Ethereum ETFs to keep up with the Bitcoin counterparts, they would need to attract around $35 billion in assets over an 18-month period. A critical component of this development is the Grayscale Ethereum Trust (ETHE), which already boasts $10 billion in assets and will convert to an ETF at launch, easing the pathway to the required target.

Consequently, Spot Ethereum ETFs would need an additional $25 billion in new inflows to match the anticipated growth of Bitcoin ETFs by the end of 2025. By examining international ETP market trends, Hougan further supported his estimates with data from Europe and Canada, showing comparable allocation trends between Bitcoin and Ethereum ETPs relative to their market caps.

Analyzing International Market Trends for ETPs

Hougan used insights from international markets as reference points. In Europe, Bitcoin ETPs manage assets totaling €4,601 million, 78% of the market, while Ethereum ETPs hold €1,305 million, accounting for 22%. Similarly, in Canada, Bitcoin ETPs command $4,942 CAD (77%) in assets under management, with Ethereum ETPs managing $1,475 CAD (23%).

Using these international comparisons, Hougan projected that US Spot Ethereum ETFs could capture approximately 22% of the US market. He consequently revised his original net inflow estimates from $25 billion to $18 billion, excluding the existing $10 billion from Grayscale’s assets.

Hougan further adjusted the prediction by considering the impact of carry trades on market totals. He estimated that carry trades account for a significant portion of the flow into US Spot Bitcoin ETFs and adjusted the inflow estimates by removing $10 billion of carry trade-related assets from Bitcoin’s projections. This led to a revised forecast of $90 billion for Bitcoin ETPs and subsequently $15 billion for Spot Ethereum ETFs.

Conclusion

To summarize, Matt Hougan’s informed analysis projects a promising future for US Spot Ethereum ETFs, anticipating $15 billion in net inflows over the next 18 months. This forecast is grounded in current market behavior and the proportional relationship between Bitcoin and Ethereum ETP investments. As these financial products continue to gain approval and traction on major investment platforms, the expected inflows underscore a robust market interest and potential growth in the crypto asset space.