Bitwise’s Chief Investment Officer, Matt Hougan, recently discussed the potential influx of funds that a US Ethereum spot ETF could attract. Specifically, he outlined how much capital these funds could attract in the first 18 months of trading.
Ethereum spot ETF sets a record of $15 billion in the first 18 months of trading
In a report to investors, Hougan mentioned that a spot Ethereum ETF could see net inflows of $15 billion in the first 18 months of trading. He detailed how he arrived at these figures to indicate that this was not just speculation. Firstly, Hougan emphasized the market capitalization of Bitcoin and Ethereum, stating that he expects investors to allocate their trading products (ETP) to exchanges in proportion to their market values.
Hougan noted that US investors have already invested $56 billion in spot Bitcoin ETPs, with an expected increase to $100 billion or more by the end of 2025, by which time these funds should further mature and gain approval on platforms like J.P. Morgan and Merrill Lynch.
Using this as a reference point, Bitwise’s Chief Information Officer stated that a spot Ethereum ETF would need to attract $35 billion in assets to match the Bitcoin ETF, a process that he believes could take about 18 months. Hougan also highlighted that with the Grayscale Ethereum Trust (ETHE) converting to an ETF on the day of its launch, the spot Ethereum ETF would start with $10 billion in assets.
Therefore, Hougan pointed out that the spot Ethereum ETF currently has $25 billion in inflows, matching the expected inflows of the spot Bitcoin ETF by the end of 2025. Hougan then emphasized data from the international ETP market, showing that investors may allocate their investments to Bitcoin and Ethereum ETPs based on their market values.
Using the international market as a reference point
Hougan stated that European Bitcoin and Ethereum ETPs hold €4,601 and €1,305 in assets under management (AuM) respectively, which represents 78% and 22% of the total available funds in these markets. Similarly, Canadian Bitcoin and Ethereum ETPs hold C$4,942 (77%) and C$1,475 (23%) respectively.
Based on the estimated market share of Ethereum in the Canadian ETP market, Hougan suggests that a US spot Ethereum ETF could also capture 22% of the US market. As a result, he revised his estimate of net inflows for the spot Ethereum ETF from $25 billion to $18 billion, excluding Grayscale’s assets.
Finally, Hougan lowered the projected net inflows to $15 billion because a significant portion of the funds flowing into the US spot Bitcoin ETF are related to arbitrage trading. Removing $10 billion related to arbitrage from the Bitcoin market, he reduced the valuation of Bitcoin from $100 billion to $90 billion, and the valuation of the spot Ethereum ETF from $18 billion to $15 billion.
ETH price holding at $3,300 | Source: ETHUSDT on Tradingview.com
