ETH spot ETF inflow estimation: will it repeat the trend of BTC spot ETF·Boson Technology CCG contract quantitative robot

The ETH Spot ETF was officially launched on July 23rd. This event marks an important milestone in the Cryptocurrency market and may have a profound impact on the market price and ecosystem of Ethereum. This article will explore the fee structure, inflows and outflows forecast, reflexivity effect, and other market factors that need to be considered for the ETH Spot ETF.

Author: ASXNdigital asset research company, Translator: Boson Technology Quantitative Expert Xiaosun, bosen0722

Fee Structure and Market Impact

The fee structure of ETH ETF is similar to that of BTC ETF. Most ETF providers do not charge any fees in the initial stage in order to accumulate Assets Under Management. For example, Grayscale has always maintained its ETHE fee rate at 2.5%, which is an order of magnitude higher than other providers. However, Grayscale recently launched a mini ETH ETF with an initial fee rate of 0.25%, which later dropped to 0.15%. This move aims to attract fee-sensitive investors while maintaining its competitiveness in the market.

Inflow and Outflow Prediction

There are multiple estimates for predicting ETF inflows, with an average valuation of $1 billion per month. Standard Chartered Bank's highest valuation is $2 billion per month, while JPMorgan Chase's valuation is lower at $500 million per month. To help estimate the flow, reference can be made to ETP data from Hong Kong and Europe:

1. The relative Assets Under Management of BTC and ETH ETPs is higher than the Market Cap ratio of BTC and ETH.
2. In these ETPs, the ratio of BTC to ETH is relatively constant and consistent with their market capitalization ratio.

The data from the European market shows that the Assets Under Management of CryptocurrencyETP is roughly equivalent to its Market Cap. This indicates that the inflows of ETH ETF are similar to those of BTC ETF, and are expected to have a significant impact on the price of ETH. With the increase in ETH supply, especially through Grayscale's mini trust products, the outflow of ETH may be more moderate.

Reactive effect

The reflexivity effect of ETH is similar to BTC, but more complex. Ethereum's burning mechanism (such as EIP-1559) and its vast Decentralized Finance ecosystem make the feedback loop stronger:

This reflexivity effect is relatively lacking in BTC, because the wealth effect in the BTC ecosystem is weaker. As an application store for Decentralization, Ethereum has a complete ecosystem and will benefit from the continuous inflow of underlying assets. This wealth effect, especially in the field of Decentralized Finance, has not been fully appreciated. The total locked position (TVL) in the Decentralized Finance protocol of Ethereum is about 20 million ETH (worth 63 billion US dollars). With the increase in ETH volume, this number may further rise.

Other factors to consider

1. From the inflow of funds in BTC ETF to ETH ETF: Assuming some BTC ETF investors wish to diversify without increasing their net Cryptocurrency exposure.
2. Traditional finance investors' understanding of Ethereum: The narrative of BTC as 'digital gold' is relatively simple, while the narrative of Ethereum (such as the settlement layer of the digital economy) is more complex.
3. The impact of market conditions: How will the current market conditions affect the flow of ETH and PA?
4. The potential of stakeETH ETF: With the demand for returns from TradFi, stakeETH ETF may become a popular product, and providers can earn higher income from stakeETH than from regular ETH ETFs.