The approval of a Bitcoin ETF opened the floodgates for a new class of investors to allocate to Bitcoin within their portfolios. The impact of an Ethereum ETF, however, is far less certain and is unlikely to replicate that same level of success.
When BlackRock initially filed for its spot Bitcoin ETF, BTC was trading around $25,000. The returns since then have been significant, with Bitcoin achieving a 2.6x return compared to Ethereum's 2.1x. From the cycle bottom, both assets have seen a 4.0x return. The critical question is: how much additional upside can an ETH ETF truly generate? The answer is likely "not much," unless Ethereum develops a compelling pathway to significantly enhance its economic utility.
A Deep Dive into ETF Flows
The spot Bitcoin ETFs have accumulated an astonishing $50 billion in assets under management (AUM). A closer look at the net flows since their launch, however, reveals a different story. After accounting for pre-existing GBTC AUM and asset rotation, the net inflow figure sits at approximately $14.5 billion.
This number itself is misleading. A substantial portion of this flow is attributed to delta-neutral trading strategies, primarily basis trades (selling futures and buying the spot ETF) and现货 rotation. Analysis of CME data and ETF holder patterns suggests that roughly $4.5 billion of the net inflow can be attributed to basis trading. Furthermore, large holders like BlockOne are estimated to have converted approximately $5 billion of their spot BTC into ETF shares.
After adjusting for these flows, the true net buying pressure from the Bitcoin ETF launch equates to roughly $5 billion.
Projecting the Ethereum ETF Impact
We can use this framework to project the potential impact of an Ethereum ETF. Industry analyst Eric Balchunas has estimated that Ether's flows might only be about 10% of Bitcoin's. This would translate to a true net buying flow of approximately **$500 million** over six months, with a reported net flow of around $1.5 billion.
While Balchunas's approval odds have been variable, his general pessimism regarding ETH ETF interest is a valuable reflection of broader traditional finance (TradFi) sentiment.
A more personal baseline projection sits around 15%. Starting from BTC's $5 billion true net buy figure and adjusting for ETH's market cap (33% of BTC's) and an access coefficient* of 0.5, we arrive at a true net buy figure of **$840 million and a reported net flow of $2.52 billion**.
Some arguments suggest that the Grayscale ETHE trust may see less rotation than GBTC did. In an optimistic scenario, the true net buying pressure could reach $1.5 billion**, with reported net inflows of **$4.5 billion—roughly 30% of Bitcoin's flow.
In all cases, the true net buying figure pales in comparison to the $2.8 billion in derivative-led buying that front-ran the ETF approval. This suggests the ETF news is already largely priced into the market.
*The access coefficient adjusts for the differing holder bases of BTC and ETH. Bitcoin is perceived as a macro asset, attractive to institutions with access issues—macro funds, pensions, endowments, and sovereign wealth funds. Ethereum is viewed more as a tech play, favored by VCs, crypto-native funds, technologists, and retail investors who face fewer barriers to crypto entry. Comparing the CME Open Interest (OI) to market cap ratio for ETH versus BTC suggests a coefficient of 0.5.
Lack of Smart Money Interest
Pre-ETF, ETH's open interest on the CME was significantly lower than BTC's. ETH OI represented about 0.30% of its supply, compared to 0.6% for BTC. While some might see this as a sign of being "underprepared," it could also indicate a lack of interest from sophisticated trading capital in the ETH ETF trade.
The smart money executed the BTC trade exceptionally well. Their reluctance to repeat the play with ETH is a strong signal, potentially pointing to weak underlying flow intelligence.
How Did $5 Billion Push BTC from $40k to $65k?
The simple answer is: it didn't do it alone. The现货 market had many other buyers. Bitcoin is a globally validated asset, a crucial portfolio holding with numerous structural accumulators—players like MicroStrategy (MSTR), Tether, family offices, and high-net-worth individuals.
Ethereum also has structural accumulators, but their scale and number are believed to be lower than Bitcoin's.
It's vital to remember that Bitcoin's market cap had already surpassed $1.2 trillion (at ~$69,000) before the ETFs launched. The market was already holding vast amounts of cryptocurrency. Coinbase reported $193 billion in assets under custody, with $100 billion from its institutional program. In 2021, Bitgo reported $60 billion AUC, and Binance's custody figures exceeded $100 billion.
Six months later, the ETFs hold 4% of Bitcoin's total supply. This is significant but represents only one part of a larger demand equation. Alongside billions in buys from entities like MSTR and Tether, the market was also characterized by significant under-positioning ahead of the ETF launch. A popular narrative was that the ETF would be a "sell-the-news" event, creating a market top.
This led to billions worth of short, medium, and long-term momentum selling, which subsequently had to be bought back—effectively doubling the impact of the inflows. Furthermore, shorts were forced to cover as ETF flows surged. Incredibly, aggregate open interest actually decreased after the launch phase.
Ethereum's Different Positioning
The ETH ETF enters the market under profoundly different conditions. ETH's price is already 4x from its cycle low, whereas BTC was only 2.75x from its pre-ETF launch price. Crypto-native exchange open interest has already increased by $2.1 billion, pushing it near all-time high levels. The market is (semi-)efficient. Many within the crypto community, witnessing Bitcoin's ETF success, have high expectations for ETH and have positioned accordingly.
This creates a disconnect. The exaggerated expectations of the crypto-native community are misaligned with the actual appetite from TradFi distribution channels. While crypto-natives have high awareness and purchasing power for ETH, its adoption rate as a primary portfolio allocation for non-crypto-native capital is likely to be much lower.
The "Tech Asset" Narrative Problem
A common pitch for Ethereum is its characterization as a "tech asset"—a global computer, a Web3 app store, a decentralized financial settlement layer. This was a compelling narrative in previous cycles, supported by explosive fee growth from DeFi and NFTs, allowing for a valuation thesis similar to tech stocks.
In the current cycle, this narrative is harder to justify with data. Most charts show fee growth stagnating or in negative territory. Ethereum is a "money machine," but with 30-day annualized revenue of $1.5 billion, it trades at a 300x Price-to-Sales (P/S) ratio. With negative earnings after inflation, how does an analyst justify this valuation to their father's family office or their macro fund manager?
👉 Explore advanced on-chain valuation metrics
I anticipate that the initial weeks of "fugazi" (delta-neutral) flows will be lower for two key reasons:
- The approval was somewhat unexpected, leaving issuers less time to persuade large holders to convert their ETH into an ETF wrapper.
- The incentive to convert is weaker for holders who would have to forfeit staking yields, opportunities for yield farming, or the utility of using ETH as collateral across DeFi. It's noteworthy that the staking ratio remains at just 25%.
What Does This Mean for ETH's Price?
This does not mean ETH is going to zero. At a certain price level, it will be deemed good value, and it will naturally be pulled higher as Bitcoin appreciates. Prior to the ETF, my expectation for ETH's trading range was between $3,000 and $3,800. Post-ETF, that range adjusts downward to $2,400 to $3,000.
However, if Bitcoin reaches $100,000 by Q4 2024 / Q1 2025, it could drag ETH to a new all-time high in USD terms, albeit at a lower ETH/BTC ratio. Long-term promise exists, especially if players like BlackRock and Larry Fink succeed in tokenizing real-world assets (RWA) and moving financial workflows onto blockchain rails. The value this brings to Ethereum and the timing remain highly uncertain.
I expect the ETH/BTC pair to continue its downward trajectory, likely trading between 0.035 and 0.06 next year. Although our sample size is small, each cycle has seen ETH/BTC make lower highs, making this trend unsurprising.
Frequently Asked Questions
What is the main reason an Ethereum ETF won't be as successful as Bitcoin's?
The key reason is differing investor demand. Bitcoin appeals to a broader range of institutional investors (e.g., macro funds, pensions) who were previously unable to gain exposure. Ethereum is seen more as a tech asset by TradFi, and its current economic metrics make a high-valuation thesis difficult to justify to traditional analysts.
How much net buying pressure did the Bitcoin ETF actually create?
After accounting for basis trading and large-scale conversions from spot BTC to ETF shares, the true net new buying pressure from the Bitcoin ETF launch is estimated to be around $5 billion, not the often-cited higher gross inflow figures.
Is the Ethereum ETF news already priced in?
Evidence suggests yes. Derivative market activity and open interest on exchanges front-ran the approval, with over $2.8 billion in buying activity that likely already incorporated the expected ETF-driven demand.
Could staking rewards affect the Ethereum ETF?
Yes. Unlike Bitcoin, Ethereum offers staking yields. This creates a disincentive for large holders to convert their spot ETH into an ETF share, which would typically not be able to generate these staking rewards for the holder, potentially dampening conversion rates.
What is a realistic price range for Ethereum after the ETF?
Based on analysis of true net inflows and market structure, a realistic trading range post-ETF launch is between $2,400 and $3,000, though this could be pulled higher if Bitcoin experiences a significant bull run.
Will Ethereum ever outperform Bitcoin again?
While short-term outperformance is always possible, the longer-term trend shows ETH/BTC making lower highs each cycle. For ETH to sustainably outperform BTC, it would need to demonstrate massively improved economic utility or capture new, substantial value flows like tokenization.