The chief investment officer (CIO) of Bitwise Asset Management, Matt Hougan, expects spot Ethereum (ETH) exchange-traded funds (ETFs) to draw in billions of dollars in inflows within months of getting approved by the U.S. Securities and Exchange Commission (SEC).
In a new memo to investors, Hougan says he’s anticipating at least $15 billion in net flows to ETH ETFs in the first year and a half.
“Everyone wants to know how much spot ether exchange-traded products (ETPs) will attract in net flows. My answer: $15 billion in their first 18 months.”
Hougan says his estimate is based on ETH’s market capitalization relative to Bitcoin’s, how similar products have performed in other markets such as the UK and Canada and the impact of the carry trade strategy.
The carry trade strategy involves market participants buying spot Bitcoin (BTC) ETFs/ETPs and subsequently selling Bitcoin futures contracts to pocket the difference.
The Bitwise CIO adds,
“On the other hand, my estimate doesn’t take into account the multiple tailwinds behind Ethereum’s growth, including the rise of stablecoins, growing regulatory clarity, and the aftereffects of the blockchain’s recent Dencun upgrade, which dramatically lowered transaction costs on Ethereum. A strong bull market for ETH as an asset would significantly increase demand.
Still, I think $15 billion in the next 18 months is a good starting point. My gut tells me we’ll do better than that; ETH is a compelling asset powering the world’s most versatile blockchain. But even $15 billion in net new demand will have a dramatic impact on the Ethereum market.”
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