Market Demand for Ethereum ETFs
Bitwise CIO Matt Hougan predicts a significant demand for spot Ethereum ETFs, with an estimated $15 billion in inflows within the first 18 months of trading. This estimate is based on market data that shows investors allocate funds to Bitcoin and Ethereum ETFs in proportion to their market capitalizations.
Comparison to Bitcoin ETFs
Currently, US investors have around $56 billion invested in spot Bitcoin ETFs. Hougan expects this to reach $100 billion by 2025. Assuming spot Ethereum ETFs attract 26% of the combined market share, they would need to gather $35 billion in assets to achieve parity. However, the Grayscale Ethereum Trust is expected to convert to an ETF, bringing $10 billion in assets, reducing the estimated inflows to $25 billion.
International ETF Markets
Hougan also looked at international ETF markets, where Bitcoin and Ethereum ETFs are already available. The asset split between the two cryptocurrencies is similar, with Bitcoin ETPs accounting for around 78% and Ethereum ETPs representing 22%. This aligns with the market cap breakdown, supporting Hougan’s estimate.
Carry Trade Impact
While the carry trade strategy contributes to Bitcoin ETF flows, it’s not profitable for Ethereum ETFs. Hougan adjusts his estimate by removing $10 billion in carry-trade-related AUM, resulting in a revised estimate of $15 billion in net inflows for Ethereum ETFs.
Conclusion
Hougan believes that $15 billion in net new demand for spot Ethereum ETFs within the next 18 months is a reasonable projection, considering various factors and potential adjustments to the model.
