Ether Spot ETFs to See Up to $5B of Net Inflows in First Six Months: Gemini

Gemini says it expects spot ether ETFs to see up to $5 billion of net inflows in the first six months of trading.

Ether remains undervalued relative to bitcoin, and strong inflows into the ETFs could trigger a reversal, the report said.

If the ether/bitcoin ratio were to return to the median of the last three years it could rally almost 20%.

Spot ether (ETH) exchange-traded funds (ETFs), once cleared for trading in the U.S., could see net inflows of as much as $5 billion in the first six months, crypto exchange Gemini said in a Monday research report.

The flows, when combined with the current Grayscale Ethereum Trust (ETHE) assets under management (AUM) give a total AUM for spot ETH ETFs in the U.S. of $13 billion-$15 billion in the first six months, the report said.

Gemini noted that ethers market value relative to bitcoin remains close to multiyear lows, and the inflows could improve ether's relative 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,” Gemini said.

Ether spot ETFs are expected to begin trading in the U.S. in the coming months after the Securities and Exchange Commission (SEC) approved initial filings from issuers in May. Bitcoin spot ETFs were first approved for trading in the U.S. in January of this year.

If the ether/bitcoin ratio were to return to the median value of the past three years, it could rally almost 20% to 0.067, the report noted, adding that a return to the maximum of 0.087 would represent a 55% rally.

Net inflows into spot ether ETFs below $3 billion would be a disappointment given that bitcoin versions received $15 billion of inflows in the first six months, Gemini said. Net inflows above $5 billion, a third of the bitcoin ETF level, would be a strong showing, and anything close to 50% or $7.5 billion would be a “significant upside surprise.”

This positive sentiment echoes comments from Steno Research in a report last week. Steno said ether could hit $6,500 later this year due to strong ETF inflows and other tailwinds.