Matt Hougan, Chief Investment Officer at Bitwise, recently shared some particularly bullish predictions about the future of Ether-based exchange-traded products (ETPs).
According to him, these ETPs will attract substantial investments, with net flows estimated at $15 billion in the first 18 months of their listing. This prediction is based on an in-depth analysis of the market and the current performance of ether ETPs in other regions, offering a promising insight into the potential of these financial instruments in financial markets.
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A Prediction Based on Concrete Data
Hougan doesnโt base his estimates on mere speculation. By looking at the relative market caps of Bitcoin and Ether, as well as the performance of Bitcoin ETPs, he was able to extrapolate the potential investment flows for Ether ETPs. Currently, Bitcoin represents 74% of the combined cryptocurrency market with a capitalization of $1.266 trillion, while Ether represents 26% at $432 billion.
According to Hougan, if Bitcoin ETPs are projected to see $100 billion in inflows by the end of 2025, Ether ETPs could theoretically attract up to $35 billion to reach proportional parity. However, after adjusting for immediate conversions from Grayscaleโs Ethereum Trust, which is expected to be $10 billion, the projected net inflows for Ether ETPs would be $25 billion.
Comparative Analysis and Readjustments
Based on the performance of Ether ETPs in European and Canadian markets, where they capture about 22% of the co-inflows with Bitcoin, Hougan adjusts this data to the U.S. context. This results in an initial estimate of $18 billion in potential inflows for Ether ETPs in the U.S. However, by eliminating the flows related to the โcarry tradeโ of Bitcoin ETPs, which consist of buying ETPs with Bitcoin spot and selling futures contracts against that position, Hougan revises this estimate to $15 billion.
Conclusion: A Promising Future for Ether ETPs
These predictions, if they come to fruition, could not only validate Ether as a major asset class alongside Bitcoin but also potentially transform the cryptocurrency investment landscape. ETPs on Ether would thus offer a new avenue for institutional and individual investors wishing to diversify their portfolios without the complexities associated with directly holding cryptocurrencies.
With this outlook, the cryptocurrency sector could see a new wave of institutional adoption, marking a significant step in the maturation and integration of cryptocurrencies into the overall financial system. It remains to be seen how the market will react to these new instruments once they are actually launched and available to the general public.
When it comes to Ether exchange-traded products (ETPs), it can be a bit confusing to understand exactly what they are, especially if you are new to the world of investing or cryptocurrencies. Here are a few paragraphs to explain these concepts in a simple way.
What is an FTE?
An ETP, or exchange-traded product, is a type of investment that allows you to buy or sell shares of a fund on a stock market, much like you would buy shares of a company. These funds can hold different types of assets, such as stocks, bonds, or in this case, cryptocurrencies like Ether.
Why are ETPs on Ether important?
Ether ETPs allow investors to enter the world of cryptocurrency without having to purchase Ether directly. This makes things simpler because you don't need to manage a digital wallet or worry about the security of your cryptocurrencies. You simply let the fund manage the cryptos for you, while having the ability to buy and sell your ETP shares easily, just like you would stocks.
How do ETPs on Ether work?
When you buy shares of an Ether ETP, you are investing in a fund that holds an actual amount of Ether. The value of your shares will fluctuate based on the current market price of Ether. If the price of Ether increases, the value of your ETP will also increase, and vice versa.
What are the advantages of ETPs?
What are the risks ?
As with any investment, Ether ETPs come with risks. The cryptocurrency market is particularly volatile, meaning prices can fluctuate widely in a very short period of time. Additionally, while ETPs offer some security, they are also subject to risks related to market regulations and the performance of the fund manager.
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In conclusion, Ether ETPs offer an attractive and potentially less risky way to invest in cryptocurrencies. They can be a great choice for those who want to diversify their portfolio while minimizing the complications associated with managing cryptos directly.
Source: https://news.bitcoin.com/fr/the-IT-director-of-bitwise-estimates-that-the-etp-on-ether-will-attract-billions-this-nest-not-one- guess-in-the-air/