Bitwise Chief Investment Officer: Why is the performance of Ethereum ETP likely to far exceed expectations?

In last week’s investment memo, I predicted that Ethereum ETPs would bring in $15 billion in net inflows by the end of 2025. This would be a huge achievement, and the Ethereum ETP could become one of the most successful ETPs of all time. However, Ethereum ETPs are still no match for Bitcoin ETPs. Less than six months after its listing, the Bitcoin ETP has already attracted $14 billion in net inflows. I expect that number to soar to over $50 billion by the end of 2025, with the addition of financial giants like Morgan Stanley and Merrill Lynch. In terms of market capitalization, Bitcoin is 3 times larger than Ethereum, so it makes sense that Bitcoin ETPs would attract three times the funding of Ethereum ETPs. But something has stuck with me since I wrote that memo. If things had gone the other way, Ethereum ETPs might have performed far beyond my expectations. Here’s why. Ethereum is like a high-growth tech stock. Naive investors (and some in the media) confuse Bitcoin and Ethereum. It’s easy to see why: they are the two largest crypto assets. But our readers should know that, like gold and oil, they are fundamentally different. By design, Bitcoin is a new type of monetary asset. It is designed to compete with gold, the U.S. dollar, and other fiat currencies as a store of value and, ultimately, a medium of exchange. This is an exciting area. The gold market is worth over $10 trillion, and the “currency” market is the largest in the world. If Bitcoin successfully enters these markets, its value will still increase by 10x or more. Ethereum is completely different. Ethereum is structured as a technology platform: it is a fully programmable blockchain that is the cornerstone of new crypto applications such as tokenization, stablecoins, and decentralized finance. The economics of Ethereum are simple: All else being equal, as more people use these applications, the value of the Ethereum blockchain’s asset, ETH, grows. Because you have to pay ETH to use the platform.

Leading blockchain use cases, source: Bitwise Asset Management

The reason why Ethereum ETP outperformed expectations

• Investors prefer technology stocks
• ETH is considered a technology asset, not a currency asset

• Need Raise mainstream awareness:

  • How ETH is different from Bitcoin
  • Popularization of Ethereum applications

Potential impact:

• Stablecoin asset growth
• DeFi lending channel opening
• Company tokens Fund establishment
• Hybrid ETF (ETH + technology stocks)

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