CoinDesk Report:
Author: Matthew Hougan, Bitwise Asset Management; Translation: Baishui
In last week’s CIO Memo, I projected that Ethereum ETPs will attract $15 billion in net flows by the end of 2025. This would mark a significant milestone, nearing the top of historically successful ETP launches.
However, it pales in comparison to the success of Bitcoin ETPs.
Bitcoin ETPs garnered $14 billion in net flows in less than six months since their listing.
By the end of 2025, I anticipate this figure to surpass $50 billion as Bitcoin ETPs gain approval on major platforms like Morgan Stanley and Merrill Lynch.
Considering market capitalization, Bitcoin is three times the size of Ethereum and more widely recognized, hence the threefold net flows into Bitcoin products make sense.
Yet something has troubled me since drafting that CIO Memo.
If circumstances shift in some manner, Ethereum ETPs could potentially outperform my expectations significantly.
Here’s why.
High-growth “tech stocks”
Naive investors (and some media) conflate Bitcoin and Ethereum. Why? They are the two largest cryptocurrencies. But readers of this memo know they are as different as gold and oil.
By design, Bitcoin is conceived as a new monetary asset. Its aim is to compete with gold, the US dollar, and other fiat currencies as a store of value and eventually as a medium of exchange.
This is an exciting stage. The “currency” market, with gold exceeding $10 trillion, is the world’s largest. If Bitcoin successfully penetrates these markets, its value could easily multiply tenfold or more.
Ethereum, however, is entirely different. Ethereum’s architecture is a technical platform: a fully programmable blockchain serving as the foundation for new cryptographic applications like tokenization, stablecoins, and decentralized finance.
Ethereum’s economics are straightforward: as more people utilize these applications, the value of Ethereum (the asset powering the Ethereum blockchain) increases, assuming all else remains constant.
Leading blockchain by use case
Source: Bitwise Asset Management
Why Ethereum ETPs Could Exceed Expectations
This is where I quietly suspect Ethereum ETPs could experience an unexpected surge. After all, investors favor tech stocks. Nearly all investors allocate to high-growth tech companies like NVIDIA and Meta, while relatively fewer invest in monetary assets like gold.
It’s easy for me to imagine investors reallocating a small portion of their tech investments into ETH. I believe this is easier than imagining investors formulating an entirely separate portfolio for a new monetary asset.
To achieve this, we need a core idea — that ETH is a tech investment — to gain mainstream attention. To that end, you need to see two things: 1) more people understanding the differences between Ethereum and Bitcoin, 2) some applications built on Ethereum gaining mainstream traction.
What might that look like? Imagine stablecoin assets rising from $160 billion to $16 trillion as more people embrace blockchain payments for speed and transparency. Or consider decentralized finance paving new paths for lending as regulatory applications clarify. Or imagine more companies following BlackRock’s lead in establishing tokenized funds on the Ethereum platform. Certain bets? Certainly not. But you don’t have to stretch your imagination that far to envision it.
Perhaps someone needs to launch a new ETF where 10% is ETH and 90% is tech stocks.
