• Bitwise CIO Matt Hougan predicts a $15 billion net inflow into Ethereum ETFs within their first 18 months of trading
• Hougan bases his prediction on Ethereum’s market capitalization relative to Bitcoin, data from international ETP markets, and the potential influence of the carry trade strategy
• He acknowledges the possibility of net outflows from Ethereum ETPs after the initial launch due to discount arbitrage from Grayscale’s Ethereum Trust
Bitwise Asset Management CIO Matt Hougan has made a bold prediction that the upcoming spot Ethereum exchange-traded funds (ETFs) will attract a massive $15 billion net inflow within their first 18 months of trading.
Bitwise CIO’s Forecast Based on Data and Carry Trade Potential
Hougan shared his optimistic Ethereum ETF forecast on June 26, basing his analysis on several key factors:
- Ethereum’s market capitalization relative to Bitcoin
- International ETP market data
- The potential impact of the carry trade strategy
The Bitwise CIO acknowledged that some outflows are likely after the initial launch, as traders aggressively redeem Grayscale Ethereum Trust (ETHE) shares. However, he believes Ethereum ETFs will succeed long-term thanks to Ethereum’s stellar track record as an asset.
Ethereum Market Share Suggests $15 Billion Potential
Hougan explained that he expects Ethereum ETF inflows to match Ethereum’s 26% market cap share relative to Bitcoin’s 74%. Considering Bitwise’s projection of $100 billion inflows into Bitcoin ETFs, Hougan stated Ethereum ETFs should attract $35 billion at parity. Factoring in Grayscale’s $10 billion ETHE assets under management (AUM), the net new inflows drop to $25 billion.
International ETP Markets Confirm Demand Split
Analyzing European and Canadian Bitcoin and Ethereum exchange-traded products (ETPs), Hougan found a 78%/22% split and 77%/23% split in AUM respectively.
Hougan stated this distribution likely reflects relative asset demand, noting the proportions align with market caps. Using the 22% European share as a proxy, he reduced his Ethereum ETF inflow estimate from $25 billion to $15 billion.
Limited Role Expected for Carry Trade Strategy
While highlighting carry trades may account for $10 billion in Bitcoin ETF AUM, Hougan believes this strategy won’t significantly impact Ethereum ETFs. He explained carry trades aren’t as profitable for ETH, cutting his inflow forecast to $15 billion.
Hougan reiterated this figure would be a historic success, since only four ETFs have reached $15 billion in inflows since 2020.
