Ethereum Spot ETFs Expected Inflows

Ether (ETH) spot exchange-traded funds (ETFs) are anticipated to receive approval for trading in the U.S. in the upcoming months. According to a report by Bitwise’s chief investment officer Matt Hougan, these ETFs could attract around $15 billion in net inflows within their first 18 months.

Market Analysis and Potential Inflows

The report suggests estimating the potential inflows by comparing the market caps of bitcoin (BTC) and ether. Currently, bitcoin holds 74% of the combined market value, indicating that investors are likely to allocate their investments in bitcoin and ether ETFs in similar proportions.

Since the introduction of spot bitcoin ETFs in January, U.S. investors have poured $56 billion into these products. It is projected that this figure may surpass $100 billion by the end of 2025 as major wirehouses approve these ETFs for trading, creating a significant opportunity for ether ETFs to follow suit.

Challenges and Considerations

While the Grayscale Ethereum Trust (ETHE) already holds $10 billion in assets under management (AUM) and is expected to transition into a spot ETF, additional inflows of $25 billion are required to achieve parity. In Canada, where ether ETPs represent a smaller proportion of total AUM compared to their market cap weight, challenges related to bitcoin’s first-mover advantage have been observed.

• Some investors may have limited their exposure to crypto assets by investing solely in bitcoin ETPs, potentially impacting the adoption of ether ETFs.
• The report suggests that in the U.S., similar dynamics might influence investor behavior, potentially affecting the anticipated inflows into ether ETFs.

Considering various factors, the estimate of net new inflows to ether ETFs may be adjusted to $18 billion, with additional considerations reducing the projection by another $3 billion.

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