Ethereum Spot ETFs Set to Attract $4 Billion Inflows, K33 Research Predicts in First Five Months Reaching 1.05% of ETH Supply

• K33 Researchers are optimistic spot Ethereum ETFs will attract over $4 billion in assets in 5 months.
• This inflow is poised to stir a growth in the price of the cryptocurrency across the board.

Crypto analytical firm K33 Research predicts spot Ethereum Exchange-Traded Funds (ETFs) will attract inflows of $4 billion within the first five months of trading. This translates to 800,000 to 1.26 million ETH or around 0.7% to 1.05% of the entire coin supply. Notably, this projection surpasses even JPMorgan’s forecast of $3 billion for the entire year.

K33 Research Compares Ethereum ETF to BTC ETF

The analysts at K33 base their prediction on a host of factors. One key indicator pointed out by the analysts is the high level of institutional interest in ETH. They point to the substantial Open Interest (OI) in ETH futures contracts traded on the Chicago Mercantile Exchange (CME), a popular platform for institutional investors. 

While currently at 23% of the size of Bitcoin futures, ETH futures have historically held an average share of 35%. K33 Research analysts believe this indicates increased institutional demand for ETH in the United States.

K33 Research expects that the estimated inflows of $3 billion to $4.8 billion in the first five months for the upcoming spot ETH ETF in the United States will be equivalent to 800k to 1.26 million ETH accumulated in the ETF, which is about 0.7%-1.05% of the total token supply and…

— Wu Blockchain (@WuBlockchain) June 5, 2024

Unlike futures contracts, spot ETFs require issuers to buy actual ETH coins in the market as investors purchase ETF shares. This buying pressure is expected to create a “supply crunch,” where the available ETH pool shrinks. With demand potentially outstripping supply, the price of ETH is predicted to rise.

K33 compares this scenario with the launch of spot Bitcoin ETFs in the US, which brought 60% price increases for Bitcoin (BTC) after an initial dip. They anticipate a similar reaction from ETH, potentially ending a nearly two-and-a-half-year downtrend against its senior counterpart.

The recent approval of key filings for spot Ethereum ETFs by the US Securities and Exchange Commission (SEC) surprised many market participants. This is because Ethereum’s classification is still unclear, and key players like Michael Saylor even predicted that the SEC would classify the coin as a security as previously reported by Crypto News Flash.

However, the recent approval opens the door for a potential launch as early as late June or July, subject to the finalization of necessary documentation. Surprisingly, the approved ETF applications exclude staking functionalities, likely to appease regulatory concerns. In any case, K33 downplays this omission as a potential hurdle, citing high adoption rates of non-staking Ethereum ETFs in Canada and Europe. 

Efforts from ETH ETF Applicants

As previously reported by Crypto News Flash, Franklin Templeton, VanEck, and Invesco Galaxy have recently amended their S-1 forms with the SEC. This marks a major step towards the launching of the spot Ethereum ETF products.

Additionally, Franklin Templeton revealed a competitive sponsor fee of 0.19%, which is the same as the price it charges for its current Bitcoin ETF. Meanwhile, VanEck and Invesco Galaxy are expanding their product lines. Invesco announced Coinbase Custody Trust Company LLC for Ethereum and the Bank of New York Mellon as cash custodians.

Currently, ETH is trading at $3,792, up by 1.05% in the past day, with a market cap of $455 billion.