Why Ethereum ETFs will see $3.9bn inflows in first 100 days

Why Ethereum ETFs will see $3.9bn inflows in first 100 days
Ethereum is expected to skyrocket in value once ETFS are approved. Credit: Darren Joseph
  • Ethereum ETFs are on the cusp of hitting the market, says CCData analyst.
  • Outflows from popular products could hamper a rise in prices.

Investors will pour $3.9 billion into US spot Ethereum exchange-traded funds within the first 100 days of their launch.

That’s according to Jacob Joseph, research analyst at cryptocurrency data firm CCData.

“Drawing parallels from the netflows of spot Bitcoin ETFs in the US during their initial 100 days, we estimate a potential inflow of $3.9 billion for the US spot Ethereum ETFs,” he told DL News.

Joseph added that ETFs will make the world’s second-largest cryptocurrency more attractive to institutional investors and push Ethereum to a new all-time high.

The comments come after Ethereum soared 23% since May 20 to $3,830 on the back of optimism around the Securities and Exchange Commission greenlighting the first step of the approval process.

After hearing whispers that the SEC would engage with applicants, Bloomberg Intelligence analyst Eric Balchunas changed his odds for an approval from 25% to 75%.

When those rumours proved to be true, people like Galaxy Digital CEO Mike Novogratz suggested that the regulator’s about-face suggested a warming up to crypto in Washington.

Whatever the reason, the pivot unleashed a wave of optimism among market watchers.

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Joe Lubin, co-founder of Ethereum and founder of crypto infrastructure firm Consensys, told DL News to expect a “floodgate” of demand for Ether, which would lead to a supply crunch and drive prices higher.

Institutions that have already gained exposure to Bitcoin ETFs “will most likely want to diversify into that second approved ETF,” Lubin said.

Elsewhere, Lennix Lai, OKX’s global chief commercial officer, told DL News that institutional investors will pour $500 million into Ethereum ETFs in their first week of trading.

Even as CCData’s Joseph shared the bullishness, he cautioned that “Ethereum might face challenges due to outflows from the Grayscale Ethereum Trust, similar to the market behaviour observed after the approval of spot Bitcoin ETFs.”

Following the launch of 10 spot Bitcoin ETFs in January, the Grayscale Bitcoin Trust experienced over $17.7 billion in outflows, according to BitMEX research.

“With nearly $11.1 billion currently under management in the Grayscale Ethereum Trust, we could see similar outflows from this ETF upon approval, influencing market sentiment,” Joseph said.

“Overall, this effect is likely to be short-lived, as the demand for other ETF products is capable of absorbing the selling pressure over time, as observed with the spot Bitcoin ETFs.”

He told DL News that the US SEC’s recent ETF nod could be fully approved and trading “within the next couple of months.”

Crypto market movers

  • Bitcoin is up 1.6% over the past 24 hours to trade at $69,050.
  • Ethereum is down 0.5% to 3,770.

What we are reading

Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.