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Highlights
- Comparing the IO for ETH and BTC futures on CME, K33 predicts strong institutional demand for Ethereum ETF.
- It expects $4.8 billion in inflows upon the launch of the spot Ethereum ETFs.
- ETH is likely to outperform BTC following the launch of spot Ethereum ETF.
All eyes are currently on the SEC’s decision regarding the approval of spot Ethereum ETF S-1 registrations, which could act as a catalyst for a broader market rally. According to a recent report from K33 Research, Ethereum might experience a supply shock, with nearly 1.26 million ETH potentially moving off exchanges within just five months of the ETF launch. This shift could significantly boost the Ether (ETH) price, potentially leading to a new all-time high.
Spot Ethereum ETFs to See $4 Billion in Inflows
As per the K33 Research, the spot Ethereum ETFs could see a staggering $4 billion in inflows within just the first five months of launch. K33 Research based its forecast by comparing the assets under management (AUM) in existing Ethereum (ETH)-based exchange-traded products worldwide to similar Bitcoin (BTC) products. They also analyzed the open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), a key marketplace for institutional investors.
As of now, Ether’s open interest (OI) on the CME exchange stands at 23% of the size of Bitcoin futures. However, ever since the ETH futures started trading on CME back in 2021, they have grabbed a 35% share of the BTC futures, indicating that there’s been a strong institutional demand for ETH.
While comparing these ratios along with the $14 billion in inflows for the spot Bitcoin ETFs, K33 Research predicts that the spot Ether ETFs could see inflows anywhere between $3 billion and $4.8 billion within the first five months of launch.
As per the current ETH price of $3,800, this could mean that 800,000 to 1.26 million of ETH accumulation will happen through the ETFs. This is nearly 0.7%-1.05% of the total circulating ETH supply.
ETH to Outperform Bitcoin
Soon after the spot Bitcoin ETF approval, the BTC price rallied by 60% to record highs. As per K33 Research, if the Ethereum ETFs go live for trading, Ethereum will start outperforming BTC, after nearly two years of underperformance.
More importantly, in its research report, it noted that the removal of the staking feature from ETFs won’t negatively impact the inflows into the investment product. K33 noted that in Canadian ETH ETFs, 99% of assets under management are housed in funds that do not involve staking, while in European products, the figure stands at 98%.
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