The optimism is building up more intensely on the likelihood of the United States Securities and Exchange Commission (SEC) giving its approval to spot Ethereum ETF trading soon. In preparation, Matt Hougan, Bitwise CIO has given his bullish insights on expectations for Ethereum ETF inflows.
Spot Crypto ETFs And Market Caps
Hougan is certain that the new product will amass as high as $15 billion in the first 18 months following its launch.
He provided a breakdown of how he arrived at such a massive estimation. For a start, he cited the relative sizes of Bitcoin (BTC) and Ethereum (ETH), noting that he expects the allocation from investors to align with their market capitalization.
1/ Ethereum ETPs will attract $15 billion in net flows in their first 18 months on the market.
A thread on how I get to this estimate.
— Matt Hougan (@Matt_Hougan) June 26, 2024
At the time of this writing, BTC’s market cap was pegged at $1.2 trillion, representing about 74% of the broader crypto market cap. That of Ethereum, however, comes in at $405 billion, only 25% of the market.
In less than six months, spot Bitcoin ETF has already seen $56 billion as investment from U.S. investors. It is projected that this value will rise to $100 billion before the end of 2025 especially if it is approved for trading on platforms like Morgan Stanley. Using this as a yardstick, the Bitwise CIO believes Ethereum ETFs will need $35 billion in Assets Under Management (AUM) to reach parity.
Fidelity Investments Commits $4.7M to Upcoming Spot Ethereum ETFs
Hougan stated that he does not expect the flows to come on a “straight line”. It would likely be a mix of inflows and outflows like in the case of spot Bitcoin ETFs. Notwithstanding, he is positive that the spot Ethereum ETFs will register huge success.
A few of the investment asset management firms that have indicated interest in filing a spot Ethereum ETF are already showing commitment towards the offering. Fidelity Investments made a major shift to its filing by dropping ETH staking from its Ethereum ETF filing.
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