ETF issuer Bitwise’s founder Matt Hougan speculates that the Ethereum spot ETF will attract $15 billion in funding within 18 months of its listing.
Bitwise’s Estimation Method:
Rough estimate based on Bitcoin/Ethereum market capitalization sizes
Deduct ETHE assets
Deduct arbitrage trading assets
$15 billion remains a significant success case
The estimation method employed by Bitwise to gauge the flow for the Ethereum spot ETF is initiated by the relative market capitalization sizes of BTC and ETH.
BTC: $1.266 trillion (74%)
ETH: $432 billion (26%)
US investors have invested $56 billion in Bitcoin spot ETFs. Hougan predicts that by the end of 2025, as these products mature gradually and gain approval on platforms like Morgan Stanley, this figure will reach $100 billion. By this ratio, the assets under management of the Ethereum spot ETF are expected to reach $35 billion.
However, Grayscale’s Ethereum Trust, ETHE, will convert $10 billion in assets directly into the ETF, resulting in a net inflow of $25 billion.
When compared to the figures in Europe and Canada, the distribution of Bitcoin and Ethereum seems relatively close.
Nevertheless, Hougan chooses to conservatively estimate based on a 22% market share in Europe, reducing the net inflow from $25 billion to $18 billion.
Another significant factor to consider: arbitrage trading. Up to $10 billion of assets in the US Bitcoin spot ETF may be related to arbitrage trading, where institutional investors purchase ETFs and sell BTC futures contracts on CME.
However, considering that the Ethereum spot ETF’s Ether holdings cannot be used as collateral, Hougan estimates that such arbitrage trading will not occur, thus revising the figure down from $18 billion to $15 billion.
Hougan believes this to be a historic success case. Since January 2020, only four ETFs have seen $15 billion in funding inflows. However, he anticipates that the inflow of funds might not be linear and could initially experience net outflows due to redemptions of ETHE. Nevertheless, Hougan considers ETH to be one of the best-performing assets historically, and he believes its best days are ahead.
In a previous analysis using gold and silver ETF examples from Bitfinex, there is a chance for the Ethereum spot ETF to capture 10-20% of the funds currently flowing to Bitcoin ETFs. Bloomberg ETF analyst Eric Balchunas estimates that a 10% performance compared to Bitcoin spot ETFs would already be quite good for the Ethereum spot ETF.