Analysis indicates that Ethereum ETFs could have a significant impact on the market, attracting up to $15 billion in net flows by 2025. Bitwise CIO, Matt Hougan, predicts that spot Ethereum ETFs could potentially see a net flow of $15 billion in their first 18 months. This estimation takes into account factors such as Ethereum’s market cap compared to Bitcoin, Grayscale’s Ethereum Trust conversion, the international crypto ETP market, and Bitcoin’s “carry trade.”
Hougan suggests that investors may allocate capital to Bitcoin and Ethereum ETFs in proportion to their combined market capitalization. Currently, Bitcoin ETFs have around $56 billion in assets under management (AUM), a number that Hougan expects to reach $100 billion by the end of 2025. By subtracting Grayscale’s $10 billion Ethereum Trust conversion to an ETF from this figure, it is estimated that ETH ETFs could see a net flow of $25 billion. However, as international Ethereum ETFs only hold around 22% of the combined market share compared to Bitcoin, this estimate is reduced to $18 billion.
Hougan also notes that institutions are unlikely to participate in an Ethereum “carry trade” as they do with Bitcoin ETFs due to the absence of staking in US spot ETH ETFs. A carry trade involves buying an asset in the spot market and shorting its equivalent in the futures market in order to profit from price differences. This means that Ethereum ETFs would see estimated netflows of $15 billion by the end of 2025.
Although the analysis provides conservative estimates, Hougan believes that even $15 billion in net new demand would have a significant impact on the Ethereum market.
In related news, VanEck has filed a Form 8-A with the Securities & Exchange Commission (SEC) for its spot ETH ETF, indicating a registration that allows issuers to begin trading their products on exchanges immediately after SEC approval.
Additionally, data from IntoTheBlock suggests that the Ethereum Foundation, which often executes large ETH sales during bullish cycles, has not seen significant outflows in the current cycle. This indicates that either the current cycle has yet to reach its peak or that the Ethereum Foundation has changed its approach.
Technically, Ethereum’s Taker Buy Sell Ratio has rebounded to 1.012, indicating a slightly bullish sentiment among traders. If ETH maintains its upward movement, it could face resistance at the $3,685 price level, with support at $3,203 in case of a decline.