By
Mayowa Adebajo
July 4th, 2024
According to the Gemini report, if the Ether/Bitcoin ratio returns to its median value from the past three years, Ether could see a rally of almost 20% to 0.067.
New York-based cryptocurrency exchange Gemini recently said that spot Ether (ETH) exchange-traded funds (ETFs) might attract big investments as soon as they launch. It expects these ETFs to generate $5 billion in net inflows during the first six months of trading.
Given that the Grayscale Ethereum Trust (ETHE) now has $10 billion in assets under management (AUM), this estimate indicates that the combined AUM for spot ETH ETFs might reach $13 billion to $15 billion during the same period.
Currently, ether’s market value is near its multi-year lows compared to bitcoin. It is currently trading around $3,446, down by around 8% in the past 30 days. The second-largest cryptocurrency holds a market cap of $414 billion.
Gemini predicts that the expected inflows from the new Ether spot ETFs will solidify Ether’s position in the market. It notes the favorable conditions for ether such as the comparable AUM in international ETF markets, and strong on-chain dynamics, among other unique factors.
“There is favorable risk-reward of an ETH catch-up trade in the months to come,” Gemini states.
It is important to note that the Securities and Exchange Commission (SEC) has already partially approved 19b-4 filings from issuers in May. Industry leaders suggest that once the S-1 filings receive the green light, these new financial products could begin trading as early as July. The approval of Ether spot ETFs follows the launch of bitcoin spot ETFs in the US in January.
ETH/BTC Ratio
According to the Gemini report, if the Ether/Bitcoin ratio returns to its median value from the past three years, Ether could see a rally of almost 20% to 0.067.
The report highlights that net inflows below $3 billion into spot ether ETFs would be seen as a disappointment, considering that bitcoin ETFs attracted $15 billion in inflows during their first six months. Net inflows above $5 billion, around a third of the bitcoin ETF level, would be considered a strong showing. Inflows nearing 50% of the bitcoin ETF level, around $7.5 billion, would be a “significant upside surprise”.
Interestingly, earlier in June, Jag Kooner, head of derivatives at Bitfinex, predicted that the Ether ETFs could divert up to 20% of the bitcoin ETF flows.
Gemini’s optimistic outlook aligns with the positive projections shared by Steno Research in a report released last week. Steno Research predicted that Ether ETFs could draw in $20 billion within the first year. It also forecasted ether to hit $6,500 later this year, driven by strong ETF inflows and other favorable factors.