Ethereum ETFs are set to have a significant impact on the price of ETH in the coming months, according to a report by K33 Research. The report predicts that ETH-based ETFs, which allow investors to directly hold Ethereum, will attract inflows of around $4 billion in the first five months after their launch in the US.
K33 Research arrived at this estimate by comparing the assets managed in existing ETH-based ETFs globally to similar Bitcoin products, as well as the open interest in futures contracts on the Chicago Mercantile Exchange (CME), which is favored by institutional investors. Currently, Ethereum’s open interest on the CME accounts for 23% of the size of BTC futures. However, since ETH futures began trading on the CME in 2021, it has consistently accounted for an average of 35% of BTC futures, indicating strong institutional demand for ETH in the US.
Based on the approximately $14 billion in inflows into spot BTC ETFs thus far, K33 Research estimates that ETH ETF inflows will range between $3 billion and $4.8 billion in the first five months. This estimate is slightly higher than JPMorgan’s projection of $3 billion for the entire year. According to the report, these inflows would result in the accumulation of 800,000 to 1.26 million ETH in ETFs, which is equivalent to approximately 0.7% to 1.05% of the total token supply. This could potentially create a supply squeeze for ETH, as issuers of spot ETFs will be required to purchase tokens on the spot market as investors buy ETF shares.
K33 Research expects that this significant absorption of supply will lead to a price increase in ETH, similar to what happened with BTC when spot ETFs were launched. After an initial correction in late January, BTC experienced nearly a 60% increase in price following the launch of US spot ETFs. K33 analysts predict that with the launch of ETH ETFs, the price of ETH will start to outperform BTC after a two-and-a-half-year downtrend in the ETH-BTC pair.
Market observers anticipate that ETH ETFs will begin trading around the end of June or early July, pending the completion of the necessary documentation.
Please note that this article does not constitute investment advice.