Bitwise CIO Predicts $15 Billion Inflows for Spot Ethereum ETFs

The launch of spot Ethereum exchange-traded funds (ETFs) in the US is a highly anticipated event in the cryptocurrency market. With regulatory approval from the Securities and Exchange Commission (SEC) expected soon, asset managers are gearing up for what could be a significant influx of investor capital.

Bullish Outlook for Ethereum ETFs

Matt Hougan, Chief Investment Officer at Bitwise, has expressed optimism about the potential of spot Ethereum ETFs. He predicts substantial inflows into these regulated investment vehicles within the first 18 months of trading.

Data-Driven Demand Estimate

Hougan’s prediction is based on a data-driven analysis of the existing cryptocurrency market. He compares the relative market capitalizations of Bitcoin (BTC) and Ethereum (ETH). Assuming investors allocate to Bitcoin and Ethereum ETFs proportionally to their underlying market cap, he arrives at his estimate.

Currently, Bitcoin holds a dominant position with a market cap of $1.266 trillion, representing 74% of the combined market. Ethereum, with a market cap of $432 billion, accounts for the remaining 26%.

Drawing Parallels with Bitcoin ETFs

Hougan draws on the success of existing Bitcoin ETFs to project future trends. US investors currently hold around $56 billion in spot Bitcoin ETPs. He anticipates this figure to reach or exceed $100 billion by the end of 2025 as these products mature and gain wider acceptance on major platforms like Morgan Stanley and Merrill Lynch.

Based on this $100 billion benchmark, Hougan suggests spot Ethereum ETFs would need to attract roughly $35 billion in assets to achieve market parity with Bitcoin ETFs. He estimates this could occur within 18 months.

Accounting for Existing Assets

Hougan acknowledges that factors like the Grayscale Ethereum Trust (ETHE) converting to an ETF on launch day, bringing in $10 billion in assets, could influence actual inflows. This conversion would adjust the net inflow estimate to reach parity down to around $25 billion.

Overall, Hougan’s forecast emphasizes a data-driven approach to estimating demand for spot Ethereum ETFs. He avoids speculation, instead relying on market data to support his prediction of $15 billion in net inflows during the initial 18-month period. The launch of these ETFs is expected to be a significant development for the cryptocurrency market, potentially attracting new investors and offering a regulated way to gain exposure to Ethereum.