The cryptocurrency investment landscape is poised for a major shift as Bitwise Chief Investment Officer Matthew Hougan predicts that U.S.-listed spot Ethereum (ETH) exchange-traded funds (ETFs) could amass $15 billion in net inflows during their first 18 months post-launch. This bullish forecast comes amid growing anticipation for the approval of such products, which are expected to draw significant interest from institutional investors.
In the broader context, analysts have projected that inflows into ETH ETFs may top $15 billion by the end of 2025, indicating a strong long-term outlook for Ethereum-based investment products. The comparison with existing Bitcoin ETFs is stark; over $55 billion is currently held in spot BTC ETFs by U.S. investors, with predictions pointing to this figure reaching about $100 billion by 2025’s close.
Hougan’s calculations presume that institutional investors will distribute their allocations between Bitcoin and Ether ETFs in a manner reflecting their relative market capitalizations. Specifically, he expects a 75% to 25% division in favor of Bitcoin. To reach parity with Bitcoin ETFs in terms of asset attraction, based solely on assets—not considering the potential $10 billion conversion from the Grayscale Ethereum Trust—spot ETH ETFs would need to draw $25 billion within the 18-month timeframe.
Despite Ethereum’s substantial market capitalization, Ether-based ETPs (Exchange Traded Products) have not mirrored this performance in the asset management sphere. Currently, they are underrepresented, capturing only 22-23% of total assets under management, which falls short of their market capitalization weight of 26%.
One factor that has been influential for Bitcoin products—specifically the Bitcoin “carry trade,” where investors exploit the premium between spot Bitcoin ETFs and CME Bitcoin futures contracts for profit—will not likely translate in the same regard for Ether ETFs. This expectation has been integral in the revised forecasts for Ethereum-based ETFs, which have been adjusted to $15 billion, factoring in the unique dynamics affecting the Ether market.
Despite the reduced inflow estimate, anticipated demand for Ether ETFs is expected to have a notable impact on the market. Bitwise, which is currently one of 10 issuers of spot Bitcoin ETFs and has filed paperwork for a U.S. listing of a spot Ether ETF with the SEC, stands to be at the forefront of this emerging market segment.
In essence, the investment landscape is evolving, with Ethereum increasingly gaining traction as a vital part of portfolio diversification strategies. The potential introduction of U.S.-listed spot ETH ETFs represents a significant milestone, likely to catalyze further adoption from institutional circles and possibly reshape the digital asset management industry as we know it.
