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Bitwise: Ethereum spot ETF will attract $15 billion in capital inflows

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Bitwise: Ethereum spot ETF will attract $15 billion in capital inflows

ETF issuer Bitwise's founder Matt Hougan speculates that an Ethereum spot ETF will attract $15 billion in inflows within 18 months of listing.

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Bitwise's estimation method

Here is how Bitwise estimates the flow of Ethereum spot ETF.

Estimated based on Bitcoin/Ethereum market capitalization

The starting point for estimating the flow is the relative market capitalization of BTC and ETH.

  • BTC: $1.266 trillion, 74%
  • ETH: $432 billion, 26%

American investors have invested $56 billion in Bitcoin spot ETFs. Hougan estimates that by the end of 2025, as these products mature and gain approval on platforms like Morgan Stanley, this figure will reach $100 billion. By this ratio, the assets under management for Ethereum spot ETF would reach $35 billion.

Excluding assets of ETHE

However, Grayscale's Ethereum Trust (ETHE) will directly convert assets of $10 billion to the ETF, resulting in net inflows of $25 billion.

When compared to figures in Europe and Canada, the distribution between Bitcoin and Ethereum seems relatively close.

Nevertheless, Hougan chooses to conservatively estimate with Europe's 22% market share and adjusts the net inflows from $25 billion to $18 billion.

Excluding arbitrage trading assets

Another major factor to consider is arbitrage trading. Up to $10 billion of assets in the U.S. Bitcoin spot ETF may be related to arbitrage trading, where institutional investors buy ETFs and sell BTC futures contracts on CME.

Bitcoin ETF sees consecutive net inflows but no price rise? CME short arbitrage hits record high, no one is buying coins

Considering that the Ethereum held by the Ethereum spot ETF cannot be pledged, Hougan estimates that such arbitrage trading will not occur in the Ethereum spot ETF, thus reducing the $18 billion to $15 billion.

$15 billion is still a huge success story

Hougan believes this will be a historic success story. Since January 2020, only four ETFs have received $15 billion in inflows. However, he does not believe that the flow of funds will be linear; instead, there may be net outflows at the launch due to the redemption of ETHE. But Hougan believes that ETH is one of the best-performing assets in history and sees its best days ahead.

Previously, analyzing examples of gold and silver ETFs, Bitfinex estimated that the Ethereum spot ETF has the potential to capture 10-20% of the funds currently flowing into Bitcoin ETFs. Bloomberg's ETF analyst Eric Balchunas estimates that the performance of the Ethereum spot ETF, achieving about 10% of Bitcoin spot ETF's performance, would already be quite good.

Ethereum is digital silver, and the Ethereum spot ETF could attract 10% of the funds in Bitcoin ETFs