Bitwise Predicts $15B Ethereum ETF Inflows Amid Approval Hopes

• Optimism is mounting for the approval of Ethereum ETFs.
• Bitwise is weighing in on the expected performance of the investment vehicle.
• Some industry analysts suggest potential differences in performance between ETH and Bitcoin ETFs.

Since the prospects of Ethereum ETFs changed for the better, the crypto industry has been bustling with renewed optimism. Among hopeful issuers and investors, the resurgence in hopes has heightened expectations for the investment vehicle to open an additional gateway of inflows into the second largest crypto asset and broader ecosystem.

Fueling the positive sentiment, ETH ETF hopeful Bitwise, has expressed confidence in the anticipated asset’s success.

Ethereum ETF Gateway to Billions 

Weighing in on the likely performance of ETH ETFs in the first few months of launch, Bitwise chief Investment Officer Matt Hougan forecasts net inflows to the tune of $15 billion.

Central to the analysis is the expectation that investor allocations to Ethereum will mirror its market capitalization. Hougan highlighted Bitcoin’s dominance with a 74% market cap compared to Ethereum’s 26%, which he noted as crucial for predicting how funds might flow into the ETFs.

Drawing from European and Canadian ETP markets, where Ethereum exchange traded products have attracted assets relative to their market cap, he added that a similar pattern might emerge in the U.S, driving substantial inflows for the investmnet vehicle

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The Bitwise executive further noted that for Ethereum ETPs to match Bitcoin’s success, they would need to amass around $35 billion by 2025. He stated that Grayscale’s anticipated conversion of its $10 billion-Ethereum Trust into an ETF will catalyze this process, with an additional $25 billion expected to accumulate over time, enhancing its success prospects.

Addressing concerns about the lack of staking in Ethereum ETFs , Hougan argued against its potential impact on demand.

“For instance, you could argue that Ethereum ETPs will underperform my estimate because they will not stake assets, which will lower demand. I don’t think this is true—staking income is a rounding error on ETH’s average annual return, and I think ETP investors will be happy simply having exposure,” he stated 

Hougan’s analysis presents a promising outlook for Ethereum ETFs, particularly following predictions that they may not achieve the same level of success as Bitcoin.

ETH ETFs to Lag Behind Bitcoin?

According to ETF analyst James Seyffart, the funds might only attract a quarter of the investment recorded for their Bitcoin counterparts.

Adopting a more skeptical approach to the forecast than the Bitwise CIO, Seyffart asserted that the stark difference between Bitcoin and Ethereum’s market capitalization positions the latter at a disadvantage, making ETH ETFs unlikely to attract the same level of investment.

While the launch of the investment vehicle is still expected to attract significant buzz, the ETF expert states that they may not be as shattering as Bitcoin’s, estimating they may only pull 20-25% of the investment compared to Bitcoin ETFs . 

Another focal point of his skepticism is the inability of Ethereum ETFs to unlock the full potential of the Ethereum blockchain. While direct ownership offers investors access to participate in DeFi and NFTs , ETFs do not, which may introduce an extra layer of caution for investors and impact their success.

On the Flipside

• The approval and performance of Ethereum ETFs remain uncertain and will depend on various market dynamics and regulatory developments.
• Experts expect Ethereum ETFs to receive regulatory approval and go live by early July.
• At press time, Ethereum is trading at $3,384, up approximately 4% in the last 24 hours.

Why This Matters

Bitwise CIO Hougan predicts a promising path for Ethereum ETFs, countering concerns of potential underperformance. However, regardless of their performance, the launch of Ethereum ETFs will undoubtedly mark a major milestone for the industry and attract substantial investments.

Read this article to find out how Bitwise id gearing for the launch of its Ethereum ETF:
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