The crypto community is abuzz with anticipation as the launch of spot Ethereum exchange-traded funds (ETFs) in the United States draws near. Analysts are optimistic about the potential influx of capital these investment products could bring to the market. Bitwise Chief Investment Officer Matt Hougan is particularly bullish, forecasting that spot Ether ETFs could attract a staggering $15 billion in net flows within their first 18 months of trading. Hougan’s projection is grounded in a detailed analysis of market data, including comparisons with Bitcoin ETFs and international crypto ETP markets. As the countdown to the launch continues, investors and market watchers alike are eager to see how these ETFs will reshape the landscape of Ethereum investments.
The Potential of Spot Ethereum ETFs
Matt Hougan, the Chief Investment Officer at Bitwise, has expressed strong optimism about the future of spot Ethereum ETFs. In a detailed analysis shared on June 26, Hougan predicted that these ETFs could attract $15 billion in net flows within their first 18 months on the market. This projection is based on a comprehensive examination of various data points, including the market capitalization of Ether (ETH) compared to Bitcoin (BTC), the performance of international crypto ETP markets, Grayscale’s Ethereum Trust (ETHE) conversion, and the dynamics of spot Bitcoin ETFs' "carry trade."
Market Capitalization Comparison
Hougan’s analysis begins with a comparison of the market capitalizations of Bitcoin and Ethereum. He expects investors to allocate funds to Bitcoin and Ethereum ETFs in proportion to their market caps. As of now, Bitcoin holds approximately 74% of the market, while Ethereum accounts for about 26%.
“Absent other information, I’d expect investors to allocate to BTC and ETH ETPs roughly in line with their market caps: BTC: $1.266 billion (74% of the market) and ETH: $432 billion (26% of the market),” Hougan noted.
U.S. Investors and Spot Bitcoin ETPs
Hougan highlighted that U.S. investors currently have $56 billion invested in spot Bitcoin ETPs. He anticipates this figure to grow to $100 billion by the end of 2025 as these ETFs mature and gain approval on major platforms like Morgan Stanley. Using this $100 billion benchmark and subtracting Grayscale’s $10 billion Ethereum Trust conversion to an ETF, Hougan estimates that spot Ethereum ETFs could see a net flow of $25 billion.
International ETF Markets
To validate his estimates, Hougan examined international ETF markets, noting that Canada and Europe have similar investment splits between Bitcoin and Ethereum. In these regions, Bitcoin ETPs account for approximately 78% of the total assets under management (AUM), while Ethereum ETPs represent around 22%.
“The fact that the asset splits are nearly identical across the two geographies suggests to me that this split broadly captures the relative demand for BTC and ETH among ETP investors,” Hougan explained.
Given that international Ethereum ETFs only gather around 22% of the combined market share compared to Bitcoin, Hougan adjusted his estimate from $25 billion to $18 billion.
The Impact of the Carry Trade
Hougan also considered the potential impact of the "carry trade," expressing reservations that institutions might not participate in an Ethereum carry trade as they do with Bitcoin ETFs due to the absence of staking in U.S. spot Ethereum ETFs. A carry trade involves buying an asset in the spot market and shorting its equivalent in the futures market to profit from the price difference when the asset’s futures contract trades at a premium to its spot price.
To maintain a conservative estimate, Hougan removed the $10 billion carry-trade-related AUM when sizing the Bitcoin market, leading to a revised estimate of $15 billion in net inflows for Ethereum ETPs by the end of 2025.
“I think ETH ETPs are going to be a big success. At least, that’s what the data tells me,” Hougan concluded.
Preparations for Launch
Meanwhile, prospective spot Ethereum ETF issuers are finalizing their registrations ahead of the launch, following approval by the U.S. Securities and Exchange Commission (SEC) on May 23. Firms have been submitting amended Form S-1 registration statements as part of the process. According to Bloomberg ETF analyst Eric Balchunas, spot Ether ETFs could begin trading in the U.S. by July 2.
VanEck’s Progress
On June 25, investment manager VanEck filed a Form 8-A with the SEC for its spot Ether ETF, bringing it one step closer to launching. This move signifies the growing momentum and interest in Ethereum ETFs among institutional investors.
Ethereum Price Analysis
Data from IntoTheBlock shows that Ethereum (ETH) is finding support around the $3,300 demand zone. The In/Out of the Money Around Price (IOMAP) model, which provides information on addresses that bought an asset within a certain price range, indicates that this level lies in the $3,257 to $3,557 price range, where approximately 1.4 million ETH were previously bought by roughly 2.73 million addresses.
Technical Indicators
When viewing the ETH/USD weekly chart, the 20-week exponential moving average (EMA) currently sits around this support level, making it a strong line of defense for the bulls. From a technical standpoint, the relative strength index (RSI) remains in the positive region above the midline, and the price strength at 55 suggests that market conditions still favor the upside.
In the short term, traders appear to be setting their Ether price targets in the $3,500 to $3,973 range, indicating a bullish sentiment in the market.
Conclusion
The launch of spot Ethereum ETFs in the United States is poised to be a significant milestone for the crypto market. With projections of $15 billion in net inflows within the first 18 months, these ETFs could attract substantial capital and reshape the landscape of Ethereum investments. As firms finalize their registrations and prepare for launch, the market eagerly awaits the potential impact of these investment products. Investors and market watchers should stay tuned for further developments as the countdown to the launch continues.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
