The cryptocurrency community is eagerly anticipating the introduction of Ethereum exchange-traded funds (ETFs) in the United States, with analysts predicting that they could attract significant capital into the market. Matt Hougan, the chief investment officer at Bitwise, is optimistic about the potential of these investment products and believes that spot Ether ETFs could attract $15 billion in net flows within the first 18 months of trading.
Hougan’s projection is based on a comprehensive analysis of available data, including a comparison of Ethereum’s market capitalization to Bitcoin’s, the international crypto ETF market, the conversion of Grayscale’s Ethereum Trust to an ETF, and the “carry trade” of spot Bitcoin ETFs. He expects investors to allocate their investments to Bitcoin and Ethereum ETFs in proportion to the market capitalization of these two cryptocurrencies.
Hougan points out that U.S. investors currently have $56 billion invested in spot Bitcoin ETFs, and he expects this figure to reach $100 billion by the end of 2025 as these ETFs mature and gain approval on platforms like Morgan Stanley. Using $100 billion as a benchmark and deducting Grayscale’s $10 billion Ethereum Trust conversion, spot Ethereum ETFs could see a net flow of $25 billion.
To validate this figure, Hougan analyzed international ETF markets and found that Canada and Europe have similar splits of investments between Bitcoin and Ethereum, with Bitcoin ETPs accounting for approximately 78% and Ethereum ETPs representing around 22% of the total assets under management. Considering that international Ethereum ETFs only gather around 22% of the combined market share compared to Bitcoin, Hougan revises the estimate from $25 billion to $18 billion.
Furthermore, Hougan considers the potential impact of the “carry trade” and expresses concerns that institutions may not participate in an Ethereum carry trade like they do with Bitcoin ETFs due to the absence of staking in U.S. spot Ethereum ETFs. To maintain a conservative estimate, he removes the $10 billion carry-trade-related assets under management when sizing the Bitcoin market, resulting in a revised estimate of $15 billion in net inflows for Ethereum ETFs by the end of 2025.
Meanwhile, issuers of spot Ethereum ETFs are finalizing their registrations ahead of the launch, following the 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, and according to Bloomberg ETF analyst Eric Balchunas, spot Ether ETFs could begin trading in the U.S. by July 2.
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.
In terms of price, Ethereum has found support around the $3,300 level, according to data from IntoTheBlock. The In/out of the Money Around Price (IOMAP) model shows that this level lies within the $3,257 to $3,557 price range, where a significant amount of ETH was previously bought by a large number of addresses. The 20-week exponential moving average (EMA) also sits at this level on the ETH/USD weekly chart, providing strong support for the bulls.
From a technical standpoint, the relative strength index remains in the positive region above the midline, indicating favorable market conditions for the upside. Traders are setting their Ether price targets in the range of $3,500 to $3,973 in the short term.
It is important to note that this article does not provide investment advice or recommendations, and readers should conduct their own research before making any investment decisions.