Here’s How Much Institutions Can Throw Into Ethereum ETFs Up Front (Report)

Trader positions reveal a moderate degree of excitement around spot Ethereum ETFs. Despite a relatively quiet week, the expected arrival of these funds is expected to mirror the explosive path witnessed during the launch of Bitcoin ETFs, according to K33 research.

In fact, the research firm’s projections suggest that local Ethereum ETFs could witness an estimated flow of $4 billion into these investment vehicles during the initial five-month period after their launch.

$4M windfall expected for Ethereum ETFs

The upcoming launch of Ethereum-based exchange-traded funds (ETFs) in the United States, which will allow direct investment in Ether, is expected to attract significant inflows. According to the company’s latest report, these ETFs may receive about $4 billion in inflows in the first five months.

K33 research made comparisons between assets under management in existing Ethereum-based exchange-traded products worldwide and similar Bitcoin products, as well as analyzing open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), a popular market for institutional investors.

The report highlighted that while current open interest in ETH futures on the CME is 23% of the size of BTC futures, the average share of ETH futures has been around 35% of BTC futures since to begin trading on the CME in 2021. This discrepancy suggests significant institutional demand for ETH exposure in the US market, according to K33.

The approval of spot Bitcoin ETFs led to a more than 60% increase in the price of the world’s largest digital asset, which subsequently took it to new all-time highs. According to K33, the introduction of Ethereum ETFs could make ETH overtake BTC after almost two years of delay.

Meanwhile, Bloomberg ETF analyst Eric Balchunas previously predicted that Ethereum spot ETFs will attract 10% to 20% of the inflows witnessed by the Bitcoin counterpart.

“10 might be a bit much. but I would at least divide by 5 when it comes to expectations around Ether spot ETFs flowing/volume/averages/everything relative to local bitcoin ETFs. That said, take the 20 % of what they got would be a big win/successful launch by normal ETF standards.”

Participation Abandoned by Ether ETF Issuers

Local Ethereum ETF applicants have strategically removed parts of their filings that would have allowed participation in fund assets, potentially allaying SEC concerns. The move comes as the SEC considers betting to be an illegal offering of cryptocurrency platforms, which could constitute unregistered securities. The regulator had even taken action against several crypto platforms for offering staking services to US customers.

Notably, K33’s report also highlighted that the exclusion of Ethereum ETFs’ participation feature would not adversely affect the inflows of these investment products.

The firm noted that in Canadian Ethereum ETFs, 99% of assets under management are held in funds that do not involve holdings, while in European products, the corresponding figure is 98%.

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