Matt Hougan CIO at Bitwise has predicted the imminent spot Ethereum In the first 18 months, exchange-traded fund (ETF) net flows will reach $15 billion.
Hougan shares this forecast On June 26, he based his prediction on Ethereum’s relative market capitalization. BitcoinThe data on international ETP and carry-trade markets as well as the possible influence carried trade strategies.
He acknowledged that there could be net outflows of ETH ETPs following the initial launch. This is because traders who engage in arbitrage discounting aggressively redeem positions from Grayscale Ethereum Trust. This is a good question. similar trend was observed Grayscale Bitcoin Trust was the first Bitcoin ETF to be launched, in January.
Hougan, despite this, believes that Ethereum ETPs are going to succeed as the asset they’re based on is among the most successful assets in history.
BTC relative size and ETH relative sizes
Bitwise CIO said that investors should allocate money to Ethereum and Bitcoin ETFs based on their respective market capitalizations, currently $432 million and $1.26 trillion. It would seem that Ethereum ETFs should be weighted around 26% and Bitcoin ETFs 74%.
Hougan has argued that the US is a spot Bitcoin ETF’s assets under management (AUM) As these products become more mature, they will gain acceptance on platforms such as Morgan Stanley.
Hougan said that Ethereum ETFs would need to attract $35 billion over the next 18 months in order to achieve parity. When compared to other ETFs, however Grayscale Ethereum Trust’s If you remove $10 billion from the AUM, it drops to 25 billion.
International ETP
Hougan reported that AUM for the European bitcoin and Ethereum ETP market revealed AUM of 78% and 22% respectively. Ethereum products. These figures were 77% in Canada for Bitcoin, and 23% in Canada for Ethereum.
According to Hougan, similarity between asset allocations in both regions indicates that investors of ETPs are more interested in Bitcoin and Ethereum. Hougan explained:
“The fact that the split is roughly in line with the relative market capitalization of the two assets adds to my confidence that this kind of break-down reflects “Normal” demand.”
Hougan reduced his estimated net flows by $25 billion from 25 billion.
Carry on business
Hougan was also highlighted “the carry trade” As one of the most important factors impacting Ethereum ETF flow. As one important factor impacting Ethereum ETF flows. carry trade This is a type of trading strategy that involves arbitraging the difference in price between futures and spot for an asset.
Bitwise’s CIO stated that this strategy is responsible for around $10 billion in spot Bitcoin ETF assets. But he does not anticipate spot Ethereum ETFs following the same pattern. “carry trade is not reliably profitable in ETH for non-staked assets.”
He also said that carry trading will not have an impact on the AUM for spot Ethereum ETFs. Hougan reduced his estimate of net inflows to spot Ethereum-based ETFs by $15 billion.
According to him
“[This number] would be a historic success [as] only four ETFs launched since January 2020 have gathered $15 billion in flows.”
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Source: cryptoslate.com