It is predicted that the Ethereum spot exchange-traded fund (ETF), which is counting down the additional approval from the U.S. Securities and Exchange Commission (SEC), will attract a net inflow of $15 billion in the first 18 months of launch.
What's New: Matt Hogan, Chief Investment Officer (CIO) of Bitwise, a digital asset management company, predicted this in official research published on the 25th (local time).
In his research, Hogan gave a relatively detailed explanation of why the inflow is expected to be $15 billion. The calculation starts from the market capitalization ratio of Bitcoin and Ethereum. Currently, Bitcoin's market capitalization is approximately $1.266 trillion, accounting for 74% of the total market. On the other hand, Ethereum is worth $432 billion, or about 26%.
He previously cited Europe and Canada as examples, where Bitcoin and Ethereum were introduced in the form of exchange-traded products (ETPs). If we calculate the market capitalization ratio of ETPs launched in these two countries, it is 78:22 in Europe and 77:23 in Canada. In other words, it is very similar to the actual market capitalization ratio of the underlying assets, Bitcoin and Ethereum. However, he explained that the reason for the 3-4% gap is that “in most cases, Bitcoin ETP is released first and enjoys a first-mover effect.”
Background to the issue: Now that you know the ratio, it's time to calculate the total inflow. Hogan made an additional argument by mirroring the Bitcoin spot ETF that was launched in the U.S. market last January. US investors have invested a total of $56 billion in Bitcoin spot ETFs, including GBTC, which was originally an investment trust but has now been converted to an ETF, and if large investment banks such as Morgan Stanley and Merrill Lynch additionally enter, this size will increase by 2025. It is expected to reach more than $100 billion by the end of this year.
He explained, “Based on this $100 billion, the Ethereum spot ETF needs to attract $35 billion worth of assets to achieve a similar proportion.”
Important point: $35 billion is a lot of money, but $10 billion of it is already sitting in the Grayscale Ethereum Investment Trust (ETHE). Therefore, about $25 billion more needs to come in. Hogan summarized here ▲the amount of funds for carry trade frequently used in the Bitcoin market ▲the decrease in demand for Ethereum spot ETFs due to the inability to stake ▲the possibility of a Bitcoin 'first-mover effect' like in Canada and Europe He said that $15 billion would be a realistic estimate of capital inflow.
What happens next: The $15 billion that Hogan mentioned is $400 million more than the net inflow into the U.S. Bitcoin spot ETF market as of the 26th since its launch in January of this year. During this period, the price of Bitcoin rose by approximately 45%. Ethereum, which has a much smaller market capitalization, can experience price growth at a much higher rate.
Of course, the view that Bitwise is the beneficiary of directly operating the Ethereum spot ETF product in addition to the Bitcoin spot ETF product may also have had a profound effect here. “$15 billion over 18 months is a good starting point, and this new demand will have a dramatic impact on the Ethereum market,” Hogan predicted.
