Ethereum ETFs could reach $10B AUM in first year: Sygnum Bank

“When the net flows turn positive and accelerate, this will be a strong driver for the price of Ether,” said Katalin Tischhauser, Head of Investment Research at Sygnum Bank.

Spot Ether exchange-traded funds could amass as much as $10 billion in assets under management within their first year of trading.

Katalin Tischhauser, Head of Investment Research at Sygnum Bank and a former executive at Goldman Sachs, told Cointelegraph in an interview that the projections are based on her forecast for spot Bitcoin ETFs.

She predicted that Bitcoin ETF inflows would be in the $30 billion to $50 billion range for the first 12 months of trading, and Ethereum products would follow.

“Ethereum’s lesser name recognition is likely to mean slower adoption,” she said before adding:

“With Ethereum’s market capitalization a third of Bitcoin’s, we expect the relative inflows to be in the 15-35% range versus Bitcoin, with a resulting forecast of $5 to $10 billion in the first year.”

Ether ETFs offer advantages over Bitcoin

The researcher said that there were significant advantages to ETFs for traditional investors because they are mostly not set up to trade, settle, and risk-manage direct crypto investments.

“A familiar regulated product such as ETFs makes Ether easily accessible to investors who are interested in simple investment exposure.”

She added that Ethereum investments offered certain advantages over Bitcoin, which is considered a store of value asset.

“Ethereum, as the leading smart contract platform, is the best single asset proxy for the crypto industry with its multitude of applications and use cases.”

Tischhauser added that as Ether primarily derives its value from revenues and cashflows rather than as a safe-haven asset, it is also “more relatable for traditional institutional investors than the concept of digital gold.”

Ether could hit $6,000 if inflows keep coming

Despite the launch of Ether ETFs, the price of the asset hasn’t gained much. Tischhauser believes the market had not priced in any upside as it expects inflows to be underwhelming.

“This means that the price is likely to react strongly to any positive surprises. When the net flows turn positive and accelerate, this will be a strong driver for the price of Ether.”

She explained that strong inflows would have two impacts: pushing up market sentiment and creating demand shocks as the liquid supply of ETH is limited, but admits that this could take some time. 

Tischhauser noted that if Ethereum inflows are proportionally similar to those for BTC ETFs over the first couple of months, ETH prices could reach $6,000.

As the market is bearish on ETH ETF inflows, Tischhauser expects any substantial inflows into the ETFs to have a bigger impact on Ethereum than Bitcoin.

Related: Crypto ETFs to hit ‘model portfolios’ toward year end — BlackRock

Excluding Grayscale’s ETHE fund, which has $6.7 billion in AUM, the eight new ETH funds have already reached $1.5 billion in AUM in their first seven days of trading.

On July 31, the nine new Ethereum ETFs reversed a four-day outflow trend with a day of positive aggregate inflows indicating that the new products are already gaining momentum.