ETF Ethereum Spot AS: Research Predicts Inflow of US$4 Billion in First 5 Months
In a recent research by K33 Research, it was revealed that the Ethereum Spot ETF on the US stock exchange could see an inflow of up to US$4 billion. This figure is estimated to be achieved within just the first five months. If this happens, the supply of ETH on crypto exchanges could plummet by nearly 1.26 million ETH due to holding actions, and the price of ETH has the potential to rise to a new all-time high.
The green light from the SEC on Thursday (23/5/2024) has indicated that financial authorities and exchanges in the US have essentially approved all proposals submitted for Ethereum-based crypto exchange-traded funds (ETFs). However, the public is still awaiting when these ETFs will start trading on stock exchanges like NYSE and Nasdaq, after several ETF providers, including BlackRock, updated their registrations on the S1 Form a few days ago.
US$4 Billion Inflow Could Enter ETF Ethereum Spot
According to K33 Research, the Ethereum Spot ETF market on US stock exchanges could receive an incredibly large inflow of funds, amounting to US$4 billion in the first five months of its launch.
This forecast is based on the comparison of assets under management (AUM) in Ethereum-based products (ETH) traded on exchanges (ETPs/exchange-traded products) in various countries, including the UK, with similar Bitcoin-based products (BTC). They also analyzed open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), a major market for institutional investors in these derivatives.
Assuming open interest in Ether on the CME exchange reaches 23 percent of the size of Bitcoin futures contracts, this product has gained a 35 percent share of BTC futures contracts since ETH futures trading began on CME in 2021, indicating strong institutional demand for ETH.
By comparing this ratio with the US$14 billion inflow for Bitcoin Spot ETFs, K33 Research predicts that the Ethereum Spot ETF could receive inflows between US$3 billion and US$4.8 billion in the first five months of its launch.
With the current price of ETH at US$3,800, this means an accumulation of 800,000 ETH to 1.26 million ETH through the ETF, equivalent to 0.7 percent to 1.05 percent of the total circulating supply of ETH.
Compared to other crypto ETFs in the US, after the approval of the Bitcoin Spot ETF in January 2024, the price of BTC surged 60 percent to reach an all-time high in March 2024, before the 4th Halving.
According to K33 Research, if ETH-based ETFs start trading, Ethereum will begin to outperform BTC after nearly two years of lower performance. Another important highlight is that the removal of staking features from the ETF will not have a negative impact on inflows into these investment products.
K33 notes that in ETH ETFs in Canada, 99 percent of managed assets are in funds that do not involve staking, while in European products, the figure reaches 98 percent.
