Ethereum ETFs Could Draw $15B Within 18 Months, Predicts Bitwise CIO
Summary:
Anticipation grows in the crypto community for the debut of spot Ethereum exchange-traded funds (ETFs) in the United States, with experts suggesting they could usher in substantial capital. Bitwise CIO Matt Hougan predicts that Ethereum ETPs could draw $15 billion within 18 months. This projection factors in comparisons of Bitcoin and Ether market caps, international crypto ETP markets, and more. Meanwhile, Ether has been noted to find support around the $3,300 demand zone, with traders setting short-term price targets between $3,500 and $3,973. The launch of spot Ethereum ETFs in the U.S. could potentially happen by July 2.
The advent of spot Ethereum exchange-traded funds (ETFs) in the United States is eagerly anticipated by the cryptocurrency sector, with certain experts suggesting they could usher in huge capital into the market. Bitwise's chief investment officer, Matt Hougan, holds a positive outlook regarding the future of these financial instruments, forecasting major investments into spot Ether ETFs within the initial trading months. Hougan anticipates that "Ethereum ETPs will draw a net flow of $15 billion in their first year and a half of market presence," as he argued in his June 26 analysis.
Hougan's $15 billion forecast is informed by an in-depth assessment of relevant data, comparing both the Ether (ETH) and Bitcoin (BTC) market caps, the worldwide ETP crypto market, the conversion of Grayscale's Ethereum Trust (ETHE), and spot Bitcoin ETFs' "carry trade". He predicts a proportional distribution of investments in Bitcoin and Ethereum ETFs, mirroring their respective market capitalizations. He specifies that this prediction is based on aggregating the market capitalization of the two leading cryptocurrencies only.
As per Hougan's analysis, "$56 billion of investment from U.S. investors are held in spot Bitcoin ETPs," and he anticipates this number to reach $100 billion by 2025's end. This growth is expected as the ETFs mature and earn approval on platforms like Morgan Stanley. Using this $100 billion figure as a reference and deducting the conversion of Grayscale's $10 billion Ethereum Trust to an ETF, a net flow of $25 billion could potentially enter spot Ethereum ETFs.
To corroborate this number, Hougan looked into the international ETF markets. His study found a comparable distribution of investments between the two assets in Canada and Europe, with Bitcoin ETPs taking up about 78% and Ethereum ETPs accounting for nearly 22% of the total assets under management (AUM).
However, considering Ethereum ETFs only constitute roughly 22% of the shared market share compared against Bitcoin internationally, he adjusted the prediction down from $25 billion to $18 billion. Additionally, Hougan evaluated the possible impact of the "carry trade", expressing doubt that institutions would engage in an Ethereum "carry trade" due to the absence of staking in U.S. spot Ethereum ETFs. This led him to further adjust his estimation to a more conservative $15 billion in net inflows for Ethereum ETPs by end of 2025.
As we await the official launch, possible issuers of spot Ethereum ETFs continue to complete their registration following the U.S. Securities and Exchange Commission (SEC)'s approval on May 23. Companies have been updating Form S-1 registration statements as part of the process. According to Bloomberg ETF analyst Eric Balchunas, spot Ether ETFs might commence trading in the U.S. by July 2.
Notably, on June 25, investment manager VanEck submitted a Form 8-A to the SEC for its spot Ether ETF, thus advancing its potential launch. Analysis from IntoTheBlock indicates ETH receiving support around the $3,300 demand zone. Traders' short-term price predictions for Ether are set in the $3,500 to $3,973 range. This piece doesn't offer any investment advice or suggestions. All investing/trading actions carry risks, and readers must conduct their own due diligence before making decisions.
Published At
6/26/2024 11:25:00 PM
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