Galaxy Research has released a report stating that once Ethereum spot exchange-traded funds (ETFs) are approved, they could experience significant market activity, with potential net inflows of $1 billion per month. The report predicts a total net inflow of $5 billion in the first five months of trading for these ETFs. Galaxy analyst Charles Yu expects net inflows into Ethereum ETFs to be between 20-50% of net inflows into Bitcoin ETFs, with a target of 30%, translating to $1 billion per month. The approval of initial applications from Ethereum ETF applicants by the U.S. Securities and Exchange Commission (SEC) last month sets the stage for these products, pending final approval of their S-1 filings. Similar to Bitcoin ETFs, independent investment advisors and broker/dealer platforms are anticipated to be the primary demand drivers for Ethereum ETFs. The Galaxy report also highlights that Ethereum is more sensitive to ETF inflows compared to Bitcoin due to the significant portion of ETH supply locked in staking, bridges, and smart contracts, as well as the lower amount of ETH held on centralized exchanges. However, Galaxy warns that the lack of staking rewards may somewhat constrain the demand for spot Ethereum ETFs. Additionally, outflows from the Grayscale Ethereum Trust (ETHE) could pose a challenge and delay Ethereum ETF inflows. Galaxy estimates that these negative flows could amount to approximately 319,000 ETH per month, or $1.1 billion. Please note that this article does not provide investment advice.
