Bitwise CEO Matt Hougan has made a bold prediction regarding the performance of spot ether-based exchange-traded products (ETPs) in the financial markets. According to Hougan, these products are expected to attract a significant amount of investment, with net flows reaching $15 billion within the first 18 months of trading. This estimate takes into consideration the size of the ether ETP market in other regions and its relative market capitalization.
Bitwise, a firm specializing in cryptocurrency-focused asset management, anticipates a high level of interest in ethereum ETPs during their initial trading period. In a recent memo sent to investors, Hougan explained that these spot investments based on ether are likely to generate $15 billion in netflows.
Hougan’s prediction is not a mere guess, but rather a conclusion drawn from careful analysis of the available data. To arrive at these figures, he examined the market capitalization of both bitcoin (BTC) and ether (ETH) in the current cryptocurrency market. Hougan determined that bitcoin holds a market capitalization of $1,266 billion, accounting for 74% of the total market, while ether’s market capitalization stands at $432 billion, representing 26% of the market. Based on these calculations, Hougan estimated that bitcoin ETPs would attract $100 billion in inflows by the end of 2025. In order for spot ether equivalents to achieve parity, they would need to attract $35 billion in assets.
However, this figure needs to account for the immediate conversion of Grayscale’s Ethereum Trust, which is expected to reach $10 billion. Taking this into consideration, the estimated inflows for spot ether ETPs would be $25 billion.
When comparing these numbers to markets where ether ETPs have already been launched, Hougan found that they were still too high. His analysis revealed that spot ether ETPs in European and Canadian markets have managed to capture 22% of the combined BTC-ETH inflows. Applying these statistics to the U.S. market, spot ether ETPs could potentially attract $18 billion in inflows.
However, Hougan adjusted his estimate by subtracting carry trade-related inflows from the bitcoin ETP figures. Carry trades involve purchasing spot bitcoin ETPs and then selling bitcoin futures contracts against that position. By factoring in this adjustment, Hougan arrived at the final prediction of $15 billion in netflows for spot ether ETPs.
What are your thoughts on Bitwise CEO Matt Hougan’s prediction regarding the performance of spot ether ETPs? Share your opinions in the comments section below.
