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Ethereum spot ETFs will perform much like their Bitcoin-based predecessors, hauling $4 billion of inflows within five months after launch, according to K33 Research.
“This estimate is based on the relative global ETH assets under management (AUM) market share compared to BTC of 28%,” wrote the crypto brokerage firm in a Tuesday report. Similarly, the Chicago Mercantile Exchange (CME)’s ETH open interest is currently 23% of Bitcoin, reflecting a similar market share in another institutionally focused market.
As of June 3, US Bitcoin ETFs had absorbed $13.9 billion since their January launch. Across the world, Bitcoin ETFs now control over 1 million BTC, comprising over 5% of the circulating BTC supply.
By contrast, institutional funds currently control 3.3% of the circulating ETH supply. Using this as a benchmark, K33 said it expects anywhere from $3.1 billion to $4.8 billion worth of ETH ETF flows after launch. This comprises between 750,000 and 1 million ETH, or 0.65 to 0.85% of ETH’s circulating supply.
It’s a big promise when compared to the Ethereum futures ETF debut last year, which hauled peanuts in AUM next to the launch of the first Bitcoin futures ETFs in 2021. K33 believes this lackluster launch was an outlier given the poor timing with which Ethereum ETFs hit the market, and is not representative of ETH’s true investment demand.
For example, the firm notes, ETH CME futures—currently sitting at 22.9% of Bitcoin’s size—have averaged a 35% share of the market since inception. Furthermore, Between September 29 and December 26, ETH futures ETFs experienced 34.6% of the inflows of their Bitcoin-based equivalents.
“In Canada and Europe, ETH ETPs hold roughly 1/3 of the AUM held by BTC ETPs,” wrote K33. “U.S. futures-based ETH ETFs are pulling the global ETH dominance lower.”
Bloomberg ETF analyst Eric Balchunas has previously predicted that the Ethereum ETFs will haul between 10% and 20% of what the Bitcoin spot ETFs did. “Grabbing 20% of what they got would be a huge win/successful launch by normal ETF standards,” he tweeted on Wednesday.
10 may be a bit much.. but I’d at least divide by 5 when it comes to expectations around the Ether spot ETFs re flows/volume/media/everything relative to spot bitcoin ETFs. That said, grabbing 20% of what they got would be huge win/successful launch by normal ETF standards. https://t.co/QDenr3jY2B
— Eric Balchunas (@EricBalchunas) May 29, 2024
Edited by Ryan Ozawa.
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Source: https://decrypt.co/233874/ethereum-etf-5-billion-first-five-months
