Ether Spot ETFs Could See $5B of Net Inflows in the First Five Months: Galaxy

Ether spot ETFs could potentially attract a significant amount of net inflows, reaching $5 billion in the first five months of trading, according to a report by Galaxy Research. The demand for these new products is expected to come from independent investment advisors and broker/dealer platforms. However, the report also notes that the lack of staking rewards could potentially limit the demand for spot ether ETFs. Once approved, these ETFs could see approximately $1 billion of net inflows per month. Galaxy Research predicts that the net inflows into ether ETFs will account for 20-50% of the net inflows into bitcoin ETFs over the same period, with a target of around 30%. The approval of spot ether ETFs is currently pending the Securities and Exchange Commission’s clearance of the S-1 filings submitted by applicants. Galaxy Research highlights that ether will be more price sensitive to ETF inflows compared to bitcoin due to the significant portion of ETH that is locked in staking, bridges, and smart contracts, as well as the lower amount held on centralized exchanges. It is worth noting that the outflows from Grayscale Ethereum Trust (ETHE) are expected to pose a drag on ether ETF inflows, with negative flows estimated to be around 319,000 ETH per month or $1.1 billion. However, Galaxy Research suggests that the impact of ETHE ETF conversion on the ETH price will be relatively smaller compared to the impact of Grayscale Bitcoin Trust (GBTC) conversion on the bitcoin price. This is due to factors such as the absence of forced selling and bankruptcy-related pressures on ETHE. The Securities and Exchange Commission could potentially approve spot ether ETFs as early as July 4, according to a Reuters report.