Bitwise CIO Predicts $15B Inflows Into Spot Ethereum ETF Market Within 18 Months

BitwiseChief Investment Officer (CIO) Matt Hougan has weighed the potential of these ETFs, predicting that the regulated market will see significant inflows within the first few months of trading.

Asset managers are eagerly preparing for the launch of new spot Ethereum ETFs, pending approval from the US Securities and Exchange Commission (SEC). In a recent analysis, Bitwise Chief Investment Officer (CIO) Matt Hougan has predicted substantial inflows into the regulated market within the first months of trading these ETFs.

Hougan's projections are based on a data-driven approach, aiming to gauge the potential demand for spot Ethereum ETFs. According to Hougan, there is no need for speculation in estimating this demand, as available market data can be used to support the forecast.

Hougan's analysis suggests that we can expect to see net inflows of $15 billion in the initial 18-month period. To arrive at this estimate, Hougan compares the relative market capitalizations of Bitcoin (BTC) and Ethereum (ETH). As a starting point, he expects investors to allocate to Bitcoin and Ethereum exchange-traded products (ETPs) roughly in proportion to their market capitalizations.

As a reminder, US investors have had access to spot Bitcoin ETPs since 2021, with about $56** billion currently invested in these products. By the end of **2025**, as these ETFs mature and gain approval on prominent platforms like Morgan Stanley and Merrill Lynch, Hougan expects this figure to reach **$100 billion or more.

Using this $100** billion benchmark, he suggests that spot Ethereum ETFs would need to attract **$35 billion in assets to achieve parity, which he estimates will take approximately 18 months. However, Hougan acknowledges that the actual inflows may differ due to various factors.

For example, the Grayscale Ethereum Trust (ETHE) is expected to convert to an ETP on the launch day, bringing along $10** billion in assets. Factoring this in, the estimated net inflow to reach parity would be around **$25 billion.

To validate his estimates, Hougan also looks at international ETF markets, particularly Europe and Canada, which already offer Bitcoin and Ethereum ETFs. According to Hougan, the asset split between the two cryptocurrencies in these markets is also interesting to note, with Bitcoin ETPs accounting for approximately 78% and Ethereum ETPs representing around 22% of the total Assets Under Management ( AUM). This alignment with market cap breakdowns strengthens Hougan's earlier estimate.

Hougan also considers the potential impact of the "carry trade" on Bitcoin and Ethereum ETP markets. While a significant fraction of US Bitcoin ETP flows is linked to the carry trade strategy, he highlights that the Ethereum ETP carry trade is not profitable for institutions. To maintain a conservative estimate, Hougan removes the $10** billion carry-trade-related AUM when sizing the Bitcoin market, leading to a revised estimate of ** $15 billion in net inflows for Ethereum ETPs.

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In conclusion, Hougan believes that while there are several factors to consider and potential adjustments to the model, a starting point of $15 billion in net new demand for spot Ethereum ETFs within the next 18 months is a reasonable projection.

At the time of writing, ETH is trading at $3,405**, up nearly 3 % in the past 24 hours, after hitting a low of **$3,230 on Monday.

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