Ether spot Exchange Traded Funds (ETFs), which passed the first stage of approval by the United States Securities and Exchange Commission, are expected to attract up to $15 billion worth of net inflows in their first 18 months, Bitwise chief investment officer Matt Hougan wrote in a recent report.
Matt Hougan is the Chief Investment Officer at Bitwise one of the proposed issuers of the Ethereum ETF and his report stressed that one way to estimate potential inflows is to consider the relative market caps of bitcoin (BTC) and ether.
According to the report, Bitcoin is currently 74% of the total market value and investors would probably allocate to Bitcoin and Ether ETFs in the same manner.
Matt recalled that investors have invested $56 billion in spot bitcoin ETFs since they were launched in early January and the numbers are expected to rise to $100 billion before the end of 2025 as large financial houses continue to approve the products for trading on their platforms.
“Using this $100 billion figure as a reference, spot ether ETPs would need to attract $35 billion in assets to reach parity, a process I expect will take about 18 months,” Hougan wrote.
Hougan explained further that The Grayscale Ethereum Trust (ETHE), with $10 billion in assets under management (AUM), is expected to convert to a spot ETF, leaving $25 billion of inflows to reach parity.
Hougan in his report explained why Ether ETFs seem to be slightly underperforming their market capitalization weight citing Bitcoin’s first mover advantage as a potent reason for this.
“ I can imagine various reasons, including that Bitcoin ETPs arrived first in many of these markets (as they did in the U.S.). Some investors may have bought a Bitcoin ETP and stopped there, thinking their crypto exposure was covered. I suspect this dynamic will be true in the U.S. as well.
As a result, let’s take down our estimate and assume Ethereum ETPs only get 22% of the market, matching Canada. That lowers our estimate of net inflows from $25 billion to $18 billion, excluding the assets from Grayscale’s trust.” Hougan said
In conclusion, Hougan admits that his estimate does not take into account the multiple reasons behind Ethereum’s growth, including the rise of stablecoins, growing regulatory clarity, and the aftereffects of the blockchain’s recent Dencun upgrade.
“Still, I think $15 billion in the next 18 months is a good starting point. My gut tells me we’ll do better than that; ETH is a compelling asset powering the world’s most versatile blockchain. But even $15 billion in net new demand will have a dramatic impact on the Ethereum market.” Hougan concluded
What to know
- Ether Spot ETFs are expected to be approved for trading in the United States after they scale through the preliminary phase of the approval process.
- Bitwise is one of the many potential issuers of the spot Ethereum ETF whose S-1 forms have already been approved by the US SEC led by Gary Gensler.
