In a recent discussion, Bitwise’s Chief Investment Officer (CIO) Matt Hougan shed light on the potential inflows that US Spot Ethereum ETFs could attract in the coming months. He detailed his analysis and predictions regarding the amount of investment these funds could see within their first 18 months of trading.
Hougan’s projections were based on various factors, including the market capitalizations of Bitcoin and Ethereum. He emphasized the correlation between market cap and investor allocation to exchange-traded products (ETPs), particularly in the case of Bitcoin ETPs in the US. According to him, US investors have already poured $56 billion into Spot Bitcoin ETPs, with expectations for this figure to exceed $100 billion by the end of 2025. This indicates a growing interest and maturity in the ETP market, especially as platforms like Morgan Stanley and Merrill Lynch approve these funds.
To achieve parity with Bitcoin ETFs, Hougan estimated that Spot Ethereum ETFs would need to attract $35 billion in assets, with $10 billion being allocated upon launch. However, he predicted that an additional $25 billion in inflows would be required within the first 18 months of trading. By analyzing data from international ETP markets, Hougan noted that investors tend to allocate funds to Bitcoin and Ethereum ETPs in line with their market caps. European and Canadian ETPs serve as examples, with market shares mirroring the relative market caps of Bitcoin and Ethereum.
Based on this analysis, Hougan revised his initial estimate of $25 billion in inflows for Spot Ethereum ETFs to $18 billion, excluding Grayscale’s assets. This adjustment was made by considering Ethereum’s market share in Canada and applying it to the US market. Additionally, he factored in the impact of carry trades on the net inflows of US Spot Bitcoin ETFs, leading to a final estimate of $15 billion for Spot Ethereum ETFs.
Matt Hougan’s insights provide valuable perspectives on the potential growth and inflows that US Spot Ethereum ETFs could experience in the near future. By understanding the dynamics of market capitalization, investor behavior, and external factors like carry trades, stakeholders can make informed decisions regarding their investment strategies in the evolving landscape of cryptocurrency ETPs.
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