Bitwise: U.S. Spot Ethereum ETFs Could See $15B in Net Flows
As the launch of spot Ethereum exchange-traded funds (ETFs) draws near, Bitwise's chief investment officer Matt Hougan predicts these ETFs could attract significant capital into the market. Hougan expressed bullish sentiment about the potential impact of spot Ether ETFs, suggesting that Ethereum ETFs could attract $15 billion in net flows within their first 18 months.
Hougan's projection is rooted in a detailed analysis of several factors, including comparisons of Ethereum's market capitalization to Bitcoin's, the international crypto ETP market, the anticipated conversion of Grayscale’s Ethereum Trust (ETHE) to an ETF, and the dynamics of spot Bitcoin ETFs’ “carry trade.”
According to Hougan, investors are likely to allocate funds to Bitcoin and Ethereum ETFs in proportion to their market caps. "U.S. investors have already poured $56 billion into spot Bitcoin ETPs," Hougan noted, predicting this figure could reach $100 billion by the end of 2025 as these ETFs gain traction on major platforms like Morgan Stanley. Using this $100 billion benchmark and accounting for Grayscale’s $10 billion Ethereum Trust conversion, Hougan estimates spot Ethereum ETFs might see a net flow of $25 billion.
To further substantiate his estimate, Hougan examined international ETF markets, discovering that Canada and Europe exhibit similar investment splits between Bitcoin and Ethereum ETPs. In these regions, Bitcoin ETPs constitute roughly 78% of the assets under management (AUM), while Ethereum ETPs make up about 22%.
"The near-identical asset splits across geographies suggest this distribution accurately reflects ETP investors' demand for BTC and ETH," Hougan explained. Given that international Ethereum ETFs represent only 22% of the combined market share compared to Bitcoin, the estimate for potential inflows into Ethereum ETFs is adjusted from $25 billion to $18 billion.
