- US ETH Spot ETFs Could Hit $15 Billion in Net Flows Over Next 18 Months
- Despite the high chances of the ETF launch next week, more traders have shorted ETH.
Despite some analysts’ overwhelmingly low expectations for the US Ethereum spot [ETF],
Matt Hougan, CIO of Bitwise, projected that the products will be successful.
Hougan estimated the products could reach $15 billion in net flows in less than two years.
“Ethereum ETPs will attract $15 billion in net flows in their first 18 months on the market.”
Ethereum ETF: Why flows could reach $15 billion by 2025
Hougan’s argument was based on bitcoin [BTC] versus ETH market share and AUM (assets under management) of ETFs in Europe and Canada.
At the time of this writing, Bitcoins [BTC] ETH’s market cap was $1.19 trillion, while ETH’s was $405 billion. However, according to Hogan, at the time of his analysis, BTC had $1.266 billion (74% of the market), while ETH had $432 billion (26%).
Hougan established a similar demand pattern in ETPs (exchange traded products) in Canada and Europe.
It is worth noting that, in the case of assets under management in Europe, Bitcoin ETPs added €4,601 (78%), while Ethereum ETPs added €1,305 (22%). In Canada, Bitcoin ETP assets under management totaled CAD 4,942 (77%), while Ethereum ETPs totaled CAD 1,475 (23%).
As such, Hougan concluded that the figures above capture the “normal” demand for ETPs among BTC and ETH investors.
According to Hougan, if the AUM of US spot BTC ETFs reaches $100 billion by the end of 2025, ETH ETFs could reach $35 billion, based on ETH’s 26% market share.
At the time of writing, data from Soso Value revealed that BTC ETFs had accumulated $52 billion in AUM.
However, Hougan added,
“This doesn’t mean, of course, $35 billion in flows. Remember: ETHE will convert to $10 billion in assets. Subtract that and you’re left with $25 billion.”
ETHE is Grayscale’s Ethereum Trust, which some analysts believe could see outflows similar to its GBTC upon conversion to an ETF.
However, Huogan noted that when adjusted for the EU’s 22% market share, the $25 billion drops to $18 billion.
Furthermore, taking into account the likely lower carry trade flows seen in BTC ETFs, Hougan noted,
“Carry trade is not reliably profitable in ETH for non-staked assets, so I do not expect the same carry trade flow for new ETH ETFs. Removing carry trade assets from our model reduces our flow estimate from $18 billion to $15 billion.”
Such a goal would make ETH ETPs a “huge success,” Hougan wrote.
How do ETH traders position themselves for ETFs?
At press time, the second-largest digital asset was trading at $3.3K, down 15% from a high of $3.9K reached after partial ETH ETF approvals in late May.
Will it reverse losses as the market expects the ETF to launch next week?
According to Polymarket’s prediction, the odds of an ETH ETF launch next week have increased to 75% at the time of this writing.
However, despite the upcoming ETF, traders have been shorting the asset, with short positions increasing from 49% to 51% over the past three days.
Source: Coinglass
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