Ethereum spot exchange-traded funds (ETFs) are on the brink of gaining approval in the United States. Analysts predict significant inflows, with estimates suggesting over $5 billion could pour into these funds within six months. 

Predicted Inflows and Market Impact

Ethereum spot ETFs could attract net inflows of up to $5 billion within the first half-year of trading, according to a recent research report by crypto exchange Gemini, 

If combined with the current assets under management (AUM) of the Grayscale Ethereum Trust (ETHE), the total AUM for U.S. spot ETH ETFs could reach between $13 billion and $15 billion in the same period.

Gemini's projections align with sentiments from other financial institutions. Citi's research report last week suggested net inflows at 30%-35% of those seen in spot Bitcoin ETFs. This translates to an estimated range of $4.7 billion to $5.4 billion over six months. Citi also cautioned that the inflows and the beta of ether returns relative to these flows might be lower than anticipated.

Tom Dunleavy, managing partner at crypto investment firm MV Global, shared a more optimistic outlook with CoinTelegraph. He projected that Ethereum ETFs could draw up to $10 billion in new inflows following their launch. Dunleavy expects these inflows to drive Ether prices to all-time highs by the end of the year. He noted:

“We saw $15 billion in flows for Bitcoin. I think we’re probably going to see $5 billion to $10 billion for Ethereum. I expect a very positive price impact, sending us to new all-time highs by early Q4.”

Regulatory Developments and Timeline

Eight spot Ethereum ETF applications are awaiting final approval from U.S. regulators. Trading could commence imminently, possibly as soon as this month. These funds will join the existing roster of Bitcoin ETFs, which began trading in January and currently manage around $15.9 billion.

The Securities and Exchange Commission (SEC) has provisionally sanctioned at least three Ethereum-based ETFs. A Reuters report indicated that the trading could start by July 23, pending final offering document submissions by the end of this week. Asset managers likely to receive approval include BlackRock, VanEck, and Franklin Templeton.

Bloomberg ETF analyst Eric Balchunas confirmed that the SEC has requested applicants to submit final S-1 documents, including fee information, by Wednesday this week. 

Market Sentiment and Hedging Activity

The anticipated debut of U.S.-based Ethereum ETFs has heightened investor activity in the options market. Investors are hedging or protecting their positions from potential price swings, with pronounced activity in short-term contracts. 

Kaiko's report noted a rise in implied volatility (IV) for options expiring on July 19, from 53% on Saturday to 62% on Monday, surpassing the IV for contracts expiring on July 26.

Kaiko's report also highlighted the potential for Ether to outperform Bitcoin following the launch of Ethereum ETFs. 

The Ether to Bitcoin Price Ratio, which measures the amount of BTC required to purchase one ETH, currently stands at 0.05. This is up from 0.045 before the SEC approved the spot Ether ETFs. A higher ratio indicates a stronger performance of Ether relative to Bitcoin.

Ethereum ETH is trading at $3412, up 2% over the last 24 hours, at the time of writing.