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The cryptocurrency community is abuzz with anticipation for the debut of spot Ethereum ETFs in the U.S., with experts forecasting substantial capital injections into the sector.
According to Matt Hougan, Chief Investment Officer at Bitwise, these new financial instruments are expected to draw significant investments into spot Ether ETFs soon after they hit the market. “We project that Ethereum ETPs will secure $15 billion in net inflows within the first year and a half of their availability,” Hougan stated in a recent analysis posted on June 26 on social media platform X.
The basis of Hougan’s $15 billion forecast includes a detailed evaluation of data points such as Ether’s market capitalization relative to Bitcoin’s, the global crypto ETP market, the transformation of Grayscale’s Ethereum Trust into an ETF, and the dynamics of the spot Bitcoin ETFs’ carry trade.
Hougan anticipates a proportional investment distribution between Bitcoin and Ethereum ETFs in line with their market caps. He remarked, “Without other influencing data, I foresee investment in BTC and ETH ETPs aligning closely with their market caps: BTC at $1.266 billion, or 74% of the market, and ETH at $432 billion, or 26%.”
He notes that U.S. investors currently hold $56 billion in Bitcoin spot ETPs, a number he expects to rise to $100 billion by 2025 as these ETFs mature and gain approval from major platforms such as Morgan Stanley. After accounting for Grayscale’s $10 billion Ethereum Trust transition to an ETF, the net inflow into spot Ethereum ETFs could initially top $25 billion.
Further scrutiny of the international ETF markets, particularly in Canada and Europe, reveals a similar investment split between the two cryptocurrencies. Bitcoin ETPs represent about 78% and Ethereum ETPs about 22% of total AUM in these regions. “This near-identical asset distribution across different markets indicates a general preference for BTC and ETH among ETP investors,” Hougan added.
Given the lesser proportion of Ethereum in international ETFs, he adjusted his original forecast down from $25 billion to $18 billion. Additionally, Hougan addressed the potential impact of the carry trade, speculating that U.S. institutions might not engage in an Ethereum carry trade as actively as they do with Bitcoin due to the lack of staking options in U.S. spot Ethereum ETFs.
A carry trade typically involves purchasing an asset on the spot market and simultaneously shorting it in the futures market to capitalize on price discrepancies. For a more conservative projection, Hougan removed the $10 billion related to the Bitcoin carry trade from his market size estimate, revising the potential inflows for Ethereum ETPs down to $15 billion by the end of 2025.
Hougan expressed confidence in the success of ETH ETPs, stating, “The data strongly indicates that ETH ETPs will be very successful.”
As the launch date nears following the SEC’s approval on May 23, firms continue to update their Form S-1 registration statements in preparation. Bloomberg ETF analyst Eric Balchunas mentioned that spot Ether ETFs might start trading as soon as July 2 in the U.S. On June 25, investment management company VanEck moved a step closer to launching its own spot Ether ETF by filing a Form 8-A with the SEC.
Data from IntoTheBlock highlights ETH’s current support around $3,300 within a demand zone ranging from $3,257 to $3,557. This zone is notable as approximately 1.4 million ETH were previously purchased there by around 2.73 million addresses. The ETH/USD weekly chart shows the 20-week exponential moving average aligning with this zone, providing a robust defense for ongoing bullish sentiment. With the relative strength index maintaining above the midline and a price strength of 55, market conditions continue to support upward movement, setting short-term trader targets between $3,500 and $3,973.
