Gemini Forecasts Up to $5 Billion Inflows for US Spot Ethereum ETFs in First Six Months, Eyeing 55% Price Surge

While we wait for applicants to file their amended S1 forms for Spot Ethereum exchange-traded funds (ETFs) to the Securities and Exchange Commission (SEC) by July 8, we might as well whip out the old crystal ball and see what the approval would do for ETH.

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As reported earlier, crypto index fund manager Bitwise expects $US15 billion (AU$22.5 billion) to flow into the funds over the first 18 months of trading. Now crypto exchange Gemini has doubled down saying US$5 billion (AU$7.5 billion) could potentially flow into the funds in the first six months.

Combined with Grayscale’s Ethereum Trust, US spot ETH ETFs could reach US$13-$15 billion in AUM within six months. Gemini notes ETH’s market value relative to BTC is low, and inflows could boost ETH’s standing.

“Given the AUM comparable in international ETF markets, robust on-chain dynamics, and differentiating factors such as a thriving stablecoin environment, there is favorable risk-reward of an ETH catch-up trade in the months to come.”

Report: ETF Launch Will Increase Institutional Appetite

Fine-tuning that crystal ball and looking at the price of ETH. According to Gemini, ETH could see a 20% price rally based on the assumption the ETH/BTC ratio returns to the three-year median at 0.067 or even up to 55% if the ratio reaches a maximum of 0.087.

Wealth manager Canaccord Genuity said in a report that institutional interest in crypto is still growing and likely will do so with the Ether fund approval.

“More than 50% of the world’s largest hedge funds are now trading/holding spot BTC ETFs, major institutions have only just started to disclose holdings and the SEC may soon approve BTC ETF options.”

While the market may not reflect that positive sentiment at present, the analysts said the “slow and steady” pace at which crypto is being adopted leaves them optimistic for the long-term health of the sector.

Related: Supreme Court Ends Chevron Deference, Deals Blow to SEC’s ‘Crypto by Enforcement’ Strategy

Bloomberg Senior ETF Analyst Eric Balchunas echoed this sentiment when he pointed to the gradual and consistent flow into the Spot Bitcoin ETFs, which launched in January. These funds make up only 3% of the funds launched in the first half of 2024 but accounted for “66% of the assets and about 75% of the organic flows” he added.