Spot Ether (ETH) ETFs Could See $5 Billion in Net Inflows in First Five Months of Trading: Galaxy

Ether (ETH) Spot exchange-traded funds (ETFs), once approved for trading, could see $1 billion in net inflows per month, Galaxy (GLXY) Research said in a report released Wednesday.

“We expect net inflows into ETH ETFs to be 20-50% of net inflows into BTC ETFs over the first five months, with 30% as a target, implying $1 billion/month of net inflows,” wrote analyst Charles Yu.

Ether ETFs are about to be available for trade in the United States after the Securities and Exchange Commission (SEC) approved the candidates’ filings last month. The regulator must also approve their S-1 filings before products are allowed to be marketed. Spot Bitcoin ETF launched in the United States in January.

Similar to Bitcoin (BTC) For spot ETFs, new demand for ether versions is expected to come from independent investment advisors or brokerage/dealer platforms, the report said.

Ether will be more sensitive to ETF inflows than bitcoin due to the amount of total ETH supply locked in staking, bridges and smart contracts, and the lower amount held on centralized exchanges, said Galaxy.

Galaxy warned that demand for ether spot ETFs could be limited due to the lack of staking rewards.

Outflows from the Grayscale Ethereum Trust (ETHE) will also likely be a drag on ether ETF inflows, and Galaxy estimates that these negative flows could be around 319,000 ETH per month, or $1.1 billion. Nonetheless, due to the smaller percentage of ether held in these trusts, “the ETHE ETF conversion will have a relatively lesser impact on the price of ETH compared to the Grayscale Bitcoin Trust (GBTC) conversion.”

Unlike GBTC, ETHE is not facing a forced sell-off due to the bankruptcy of companies like 3AC and Genesis, supporting the idea that Ether will face less selling pressure from Grayscale Trusts than bitcoin, the report adds.

The SEC could approve ether spot ETFs as early as July 4, according to a Reuters report on Thursday.

Source