Bitwise’s Chief Investment Officer, Matt Hougan, recently provided insights on the potential inflows that US Spot Ethereum ETFs could attract. In a note to investors, he projected that these funds could see $15 billion in net inflows within their first 18 months of trading.
Hougan based his projection on the market capitalizations of Bitcoin and Ethereum, suggesting that investors would allocate funds to their respective ETPs in proportion to their market caps. He pointed out that US investors have already invested $56 billion in Spot Bitcoin ETPs and anticipated this figure to surpass $100 billion by the end of 2025.
To match the popularity of Bitcoin ETFs, Hougan estimated that Spot Ethereum ETFs would need to attract $35 billion in assets, a goal he believed could be achieved within 18 months. He also mentioned that upon launch, the Spot Ethereum ETFs would already have $10 billion in assets due to the conversion of the Grayscale Ethereum Trust.
Hougan provided insights from the international ETP markets, highlighting the allocation trends for Bitcoin and Ethereum ETPs. In Europe, Bitcoin ETPs hold a majority market share with €4,601 in assets, while Ethereum ETPs have €1,305 in assets. Similarly, in Canada, Bitcoin ETPs have $4,942 CAD in assets compared to $1,475 CAD for Ethereum ETPs.
By analyzing Ethereum’s ETP market share in Canada, Hougan extrapolated that US Spot Ethereum ETFs could capture 22% of the US market. This adjustment led to a revised estimate of net inflows, reducing it from $25 billion to $18 billion, excluding Grayscale’s assets. Factors such as carry trades also influenced his decision to lower the projection to $15 billion.
Overall, Hougan’s analysis provides valuable insights into the potential inflows that US Spot Ethereum ETFs could attract in their initial 18 months of trading. It showcases the strategic thinking and data-driven approach taken to arrive at these projections, offering investors a glimpse into the opportunities and challenges that lie ahead in the digital asset market.