Bitwise’s Chief Investment Officer (CIO) Matt Hougan recently provided insights on the potential inflows that US Spot Ethereum ETFs could attract. His analysis indicated that these funds could potentially see a significant amount of net inflows within their first 18 months of trading.
Market Capitalizations Comparison
Hougan based his predictions on the market capitalizations of Bitcoin and Ethereum, suggesting that investors would likely allocate to their respective exchange-traded products (ETPs) in proportion to their market caps. He highlighted that US investors have already invested a substantial amount in Spot Bitcoin ETPs and projected that this figure could increase even further by 2025.
According to Hougan’s calculations, the Spot Ethereum ETFs would need to attract $35 billion in assets to match the Bitcoin ETFs. He also mentioned that the Spot Ethereum ETFs would have a head start in assets, with $10 billion coming from the Grayscale Ethereum Trust (ETHE) upon launch. This left the ETFs with an additional $25 billion needed to reach parity with Bitcoin ETF inflows.
International ETP Data
Hougan referenced data from international ETP markets to support his analysis. He pointed out that Bitcoin and Ethereum ETPs in Europe and Canada have garnered significant assets under management (AuM) relative to the available funds in those markets. Based on Ethereum’s market share in Canada, Hougan estimated that US Spot Ethereum ETFs could capture a similar portion of the US market.
Taking into account various factors, including carry trades related to the US Spot Bitcoin ETFs, Hougan revised his estimated net inflows for the Spot Ethereum ETFs from $25 billion to $18 billion. Ultimately, he lowered the projection further to $15 billion, acknowledging the complexities and uncertainties involved in predicting investor behavior.
Matt Hougan’s analysis sheds light on the potential inflows that US Spot Ethereum ETFs could attract in their initial months of trading. While his estimates may fluctuate based on market dynamics and regulatory developments, they provide valuable insights into the evolving landscape of cryptocurrency investment products. Investors and industry stakeholders can look to this analysis for a nuanced understanding of the factors influencing the adoption and growth of Ethereum-based financial instruments.
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