The crypto community eagerly awaits the launch of spot Ethereum exchange-traded funds (ETFs) in the United States, and some analysts believe they could attract massive capital flows into the market.
Bitwise chief investment officer Matt Hougan is optimistic about the potential of these investment products, predicting substantial inflows into spot Ether ETFs within the first months of trading.
“Ethereum ETPs will attract $15 billion in net flows in their first 18 months on the market,” Hougan declared as part of his June 26 X post analysis.
Hougan’s $15 billion projection is based on a thorough analysis of available data, including a comparison of Ether’s (ETH) market cap to Bitcoin’s (BTC), the international crypto ETP market, Grayscale’s Ethereum Trust (ETHE) conversion, and spot Bitcoin ETFs’ “carry trade.”
The analyst expects investors to allocate to Bitcoin and Ethereum ETFs roughly in proportion to their market capitalizations.
“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).”
Note that Hougan arrives at the percentages by accumulating the market capitalization of the top two cryptocurrencies only.
“U.S. investors have $56 billion invested in spot Bitcoin ETPs,” Hougan explained, adding that he expects this figure to reach $100 billion by the end of 2025 “as these ETFs mature and are approved on platforms like Morgan Stanley.”
Using $100 billion as a benchmark and subtracting Grayscale’s $10 billion Ethereum Trust conversion to an ETF, spot Ethereum ETFs could see a net flow of $25 billion.
To validate this figure, he further analyzed international ETF markets and found that Canada and Europe have similar splits of investments between the two assets, with Bitcoin ETPs accounting for approximately 78% and Ethereum ETPs representing around 22% of the total assets under management (AUM).
“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.”
Since international Ethereum ETFs only gather around 22% of the combined market share compared to Bitcoin, it reduces the estimate from $25 billion to $18 billion.
Finally, Hougan considers the potential impact of the “carry trade,” expressing reservations that institutions won’t 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. The aim is 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 removes 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.”
Meanwhile, prospective spot Ethereum ETF issuers continue to finalize their registrations prior to launch following their 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.
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.
Ether price finds support around $3,300
Data from IntoTheBlock shows ETH finding support around the $3,300 demand zone. The In/out of the Money Around Price (IOMAP) model, which shows information for addresses that bought an asset within a certain price range, shows 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.
When viewing the ETH/USD weekly chart, one will note that the 20-week exponential moving average (EMA) currently sits here, making it a strong line of defense for the bulls.
From a technical standpoint, the relative strength index remained in the positive region above the midline, and the price strength at 55 suggested that the market conditions still favored the upside.
In the short term, traders appear to be setting their Ether price targets in the $3,500 to $3,973 range.
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.