- Bitwise CIO Matt Hougan believes the introduction of spot Ethereum ETFs might lead to significant capital inflows into the market.
The introduction of spot Ethereum exchange-traded funds (ETFs) in the US is much anticipated by the cryptocurrency industry, and some analysts think it might bring in enormous amounts of capital.
Matt Hougan, chief investment officer of Bitwise, is upbeat about these financial products’ prospects and projects significant inflows into spot Ether ETFs within the first few months of trade.
Hougan said in his June 26 X post research that Ethereum ETPs will draw $15 billion in net flows in their first 18 months on the market.
Hougan’s $15 billion estimate is based on a careful examination of all available data, which includes a comparison between the market caps of Ether (ETH) and Bitcoin (BTC), the global crypto ETP market, the Ethereum Trust (ETHE) conversion of Grayscale, and the carry trade of spot Bitcoin ETFs.
Investor allocation to Bitcoin and Ethereum ETFs is anticipated by the analyst to be about proportionate to their respective market capitalizations.
Keep in mind that Hougan just adds up the market capitalization of the top two cryptocurrencies to determine the percentages.
According to Hougan, there are $56 billion in spot Bitcoin ETPs held by American investors. As these ETFs mature and gain approval on platforms such as Morgan Stanley, he anticipates that this amount will rise to $100 billion by the end of 2025.
Spot Ethereum ETFs might experience a net flow of $25 billion if $100 billion is used as the benchmark and Grayscale’s $10 billion Ethereum Trust conversion to an ETF is subtracted.
In order to corroborate this estimate, he conducted additional research on global exchange-traded funds (ETF) markets. He discovered that Europe and Canada have comparable allocations of investments between the two asset classes, with Ethereum ETPs making up roughly 22% and Bitcoin ETPs approximately 78% of total assets under management (AUM).
The estimate drops from $25 billion to $18 billion because foreign Ethereum ETFs only account for about 22% of the total market share when compared to Bitcoin.
In closing, Hougan discusses the possible consequences of the carry trade, voicing concerns that because U.S. spot Ethereum ETFs lack staking, institutions will not engage in an Ethereum carry trade the same way they do with Bitcoin ETFs.
Purchasing an asset on the spot market and shorting its equivalent in the futures market is known as a carry trade. When the futures contract for the item trades above its spot price, the goal is to profit from the price differential.
Prospective spot Ethereum ETF issuers are still working to complete their registrations in front of launch, since the U.S. Securities and Exchange Commission (SEC) approved them on May 23.
As part of the process, firms have begun filing revised Form S-1 registration statements. Eric Balchunas, an ETF analyst at Bloomberg, estimates that spot Ether ETFs may start trading in the United States by July 2.
Investing manager VanEck moved one step closer to launching its spot Ether ETF on June 25 when it filed a Form 8-A with the SEC.
The price of ether finds support at $3,300
IntoTheBlock data indicates that ETH is finding support in the $3,300 demand zone. This level is in the $3,257 to $3,557 price range, where nearly 2.73 million addresses previously purchased 1.4 million ETH, according to the In/out of the Money Around Price (IOMAP) model, which provides information for addresses that purchased an asset inside a given price range.
The 20-week exponential moving average (EMA) is currently sitting here on the ETH/USD weekly chart, which is a good defensive level for the bulls.
Technically speaking, the price strength at 55 indicated that the market conditions were still favorable for the upside, and the relative strength index continued to be in the positive area above the midline.
Traders seem to be aiming for Ether prices between $3,500 and $3,973 in the near future.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
