Ethereum spot exchange-traded funds (ETFs) that directly hold ether will perform similarly well to their Bitcoin-based predecessors, drawing in $4 billion of inflows within the first five months after introduction, according to cryptocurrency analytics firm K33 Research.
1 Million ETH In Five Months
Ethereum, the world’s second-largest blockchain network, is now the focus of the next spot crypto ETF following the SEC’s recent approval of key regulatory filings from applicants. Analysts at K33 Research predict the stunning success of the incoming Ether-based products.
K33 Research’s $4 billion estimate is based on comparisons between existing Bitcoin (BTC) products and assets under management in similar ETH-based exchange-traded products (ETPs).
“This estimate is based on the relative global ETH assets under management (AUM) market share compared to BTC of 28%,” wrote K33 Senior analyst Vetle Lunde and DeFi analyst David Zimmerman in a Tuesday report.
Similarly, the ETH’s open interest on the Chicago Mercantile Exchange (CME) is currently 23% of the size of BTC futures, indicating a similar market share in another institutionally concentrated market.
US spot Bitcoin exchange-traded funds have so far attracted $13.9 billion since their January launch. Globally, these Bitcoin products now control more than 1 million BTC, comprising over 5% of the crypto’s circulating supply.
Contrarily, institutional funds presently hold 3.3% of the ETH’s total supply. Based on this, K33 expects anywhere from $3.1 billion to $4.8 billion worth of ETH ETF net flows within the first five months after the offerings officially go live. This would equate to 800,000 to 1.26 million ETH or approximately 0.7% to 1.05% of Ethereum’s circulating supply.
It’s a big prediction, considering the Ether futures ETF launch last year saw much lower demand than the debut of the first Bitcoin futures ETFs in 2021. K33 believes this muted launch was an outlier, given the bad timing with which ETH ETFs became available for investors, and does not represent ETH’s actual investment demand.
Big Ether Price Breakout Expected
Looking ahead, K33 anticipates an explosive Ethereum rally post-ETF approval.
“Such significant supply absorption shock will likely lead to price appreciation in ETH, per the strong relationship witnessed between BTC ETF flows and returns throughout the year,” said Vetle Lunde, senior analyst at K33 Research.
After an initial retracement in late January, Bitcoin surged roughly 60% to historic highs, thanks to listing spot ETFs on U.S. exchanges. K33 analysts noted that they are not “betting against [Larry] Fink,” with the BlackRock chief’s “Midas touch” creating a bullish setup for incredible strength for the crypto throughout the summer.
They predicted that with the introduction of Ethereum ETFs, the ETH price would start beating BTC after 2.5 years of the ETH-BTC pair’s downward trend.
