Bitwise Asset Management Chief Investment Officer Matt Hougan expects that within a few months of approval by the U.S. Securities and Exchange Commission (SEC), the Ethereum (ETH) exchange-traded fund (ETF) will attract billions of dollars in capital inflow.
In a new memo to investors, Hougan said he expects the net flow of the first year and a half of the ETH ETF to be at least $15 billion.
“Everyone wants to know how much net flow the Ethereum spot trading product (ETP) will attract. My answer is: $15 billion in the first 18 months,” said Hougan.
Hougan said his estimate is based on ETH’s market value relative to Bitcoin, the performance of similar products in other markets such as the UK and Canada, and the impact of arbitrage trading strategies.
Arbitrage trading strategies involve market participants buying spot Bitcoin ETF/ETP and then selling Bitcoin futures contracts to profit from the price difference.
Bitwise’s Chief Information Officer added, “On the other hand, my estimate does not take into account the multiple tailwinds behind Ethereum’s growth, including the rise of stablecoins, increasingly clear regulations, and the aftermath of the recent Dencun upgrade to the blockchain, which significantly reduces Ethereum’s trading costs. A strong bull market for Ethereum as an asset will significantly increase demand.
However, I believe $15 billion in net new demand over the next 18 months is a good starting point. My intuition tells me we will do better; ETH is an attractive asset, providing fuel for the world’s most universal blockchain. But even $15 billion in net new demand will have a huge impact on the Ethereum market.”
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