As an analyst with a background in financial markets and experience in analyzing ETF trends, I find Hougan’s analysis compelling. His use of market capitalizations as a benchmark for estimating inflows into Spot Ethereum ETFs is a sound approach, given the significant interest and investment in Bitcoin ETPs.
Matt Hougan, the Chief Investment Officer at Bitwise, shared insights on potential inflows to US Spot Ethereum Exchange-Traded Funds (ETFs) during their initial 18-month tenure.
Spot Ethereum ETFs To Record $15 Billion In First 18 Months Of Trading
In a communication to investors, Hougan indicated that Spot Ethereum ETFs could potentially attract $15 billion in net inflows during the initial 18 months of trading. To substantiate this prediction, he provided an explanation. Initially, Hougan referenced the market sizes of Bitcoin and Ethereum. He posited that investors would likely allocate funds to their corresponding exchange-traded products (ETPs) relative to the two cryptocurrencies’ market capitalizations.
Hougan pointed out that US investors have already put in $56 billion in Spot Bitcoin Exchange-Traded Products (ETPs). He anticipates this amount to surpass $100 billion or more by the end of 2025, given these funds will likely become available on financial platforms such as Morgan Stanley and Merrill Lynch after maturing further.
According to Bitwise’s CIO, referencing this information, the Spot Ethereum Exchange-Traded Funds (ETFs) require approximately $35 billion in assets to compete with Bitcoin ETFs. He anticipates that reaching this milestone could take around 18 months. However, it is important to note that these Ethereum ETFs will begin with an initial asset base of $10 billion, which comes from the Grayscale Ethereum Trust (ETHE), that converts into an ETF on launch day.
As a researcher, I’ve observed that Spot Ethereum Exchange-Traded Funds (ETFs) are currently facing $25 billion more in inflows to achieve equivalence with the anticipated inflows towards Spot Bitcoin ETFs by year-end 2025. To put this into perspective, I delved into data from international ETP markets, revealing that investors seem to be allocating to Bitcoin and Ethereum ETFs roughly proportionate to their respective market caps.
Using The International Markets As A Point Of Reference
As a researcher examining the European and Canadian markets for Bitcoin and Ethereum Exchange-Traded Products (ETPs), I’ve discovered that these ETPs manage significant assets. In Europe, Bitcoin ETPs account for €4,601 (approximately 78%) of the total available funds, while Ethereum ETPs hold €1,305 (around 22%). Likewise, in Canada, Bitcoin ETPs oversee $4,942 CAD (77%) and Ethereum ETPs manage $1,475 CAD (23%) of the respective markets’ assets.
As a crypto investor following the Canadian crypto market closely, I’ve been keeping an eye on Ethereum’s ETP market share. Based on analyst Hougan’s findings, I estimate that US Spot Ethereum ETFs could potentially capture around 22% of the US market share. Given this estimation, I’ve revised my net inflows forecast for these ETFs downwards from $25 billion to $18 billion, excluding Grayscale’s assets.
As a crypto investor, I’ve reevaluated my previous estimations considering the impact of carry trades on the reported net inflows into US Spot Bitcoin and Ethereum ETFs. Based on this reassessment, I now believe that only approximately $15 billion has entered these markets. Consequently, my revised estimation for the total assets under management (AuM) in Bitcoin is around $90 billion, and for Spot Ethereum ETFs, it’s about $15 billion.
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2024-06-26 17:46