Bitwise Ethereum Spot ETF Expected to Attract 15 Billion in Capital Inflows

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

Bitwise’s estimation method
Estimating by relative market capitalization of Bitcoin/Ethereum
Assets excluding ETHE
Assets excluding arbitrage trading
$15 billion remains a significant success case

Below is how Bitwise estimates flow for an Ethereum spot ETF:
The starting point for estimating flow is the relative market capitalization of BTC and ETH.

BTC: $1.266 trillion (74%)
ETH: $432 billion (26%)
US investors have invested $56 billion in Bitcoin spot ETFs. Hougan forecasts this figure to reach $100 billion by the end of 2025, as these products mature and gain approval on platforms like Morgan Stanley. By this proportion, assets under management for an Ethereum spot ETF would reach $35 billion.

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

Comparing with figures from Europe and Canada, the proportion of Bitcoin and Ethereum seems similar.

However, Hougan conservatively estimates with Europe’s 22% market share and adjusts net inflows from $25 billion to $18 billion.

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

(
Bitcoin ETF continuous net inflows but no rise? CME short arbitrage hits new high, not for buying coins
)
Considering that Ethereum held in an Ethereum spot ETF cannot be staked, Hougan estimates that Ethereum spot ETFs will not engage in such arbitrage trading, thus reducing the estimate from $18 billion to $15 billion.

Hougan believes this would be a historic success case. Since January 2020, only four ETFs have attracted $15 billion in inflows. However, he does not expect the flow of funds to be linear; there might initially be net outflows due to ETHE redemptions upon launch. Yet, Hougan believes ETH is one of the best-performing assets ever and sees its best days ahead.

Previously, using examples of gold and silver ETFs at Bitfinex, it was estimated that an Ethereum spot ETF could capture 10-20% of the funds flowing into Bitcoin ETFs. Bloomberg ETF analyst Eric Balchunas also estimates that matching 10% of the performance of a Bitcoin spot ETF would already be quite good for an Ethereum spot ETF.

(
Ether is digital silver, and an Ethereum spot ETF could attract 10% of Bitcoin ETF funds
)
Bitwise
Matt Hougan
Ethereum spot ETF

Further reading
Bitwise launches NFT advertisement for Ethereum spot ETF
Bitwise updates Ethereum spot ETF documents ahead of schedule, Pantera Capital to purchase $100 million in shares