$15 Billion Invested in Ethereum? Bitwise CIO Explains Two Reasons for Bold Prediction

Analyst Scott Melkar In his latest video, Melkar said that the market is down due to the summer slowdown, but major positive changes are coming for the crypto industry. One of the key developments is the launch of the Ethereum spot ETF. Bitwise CIO Matt Hougan, who joined Melkar for a conversation, predicts that these ETFs could attract as much as $15 billion in the first 18 months.

First, he noticed that people were not enthusiastic about these Ethereum ETF. Hougan has seen random predictions online suggesting that they will fail or not attract assets. However, when looking at markets in Europe, Canada, Coinbase and Binance, investors consistently choose to invest in Ethereum. He doesn’t see why it would be any different here.

The second reason is a conversation with the director of a $100 billion+ advisory firm. This firm was hesitant to invest in Bitcoin because it is only one asset and they prefer diversification. The director mentioned that as soon as there is an Ethereum ETP, they will be comfortable investing.

Why $15 billion?

Hougan understood that the default assumption should be that these ETPs will succeed, reflecting the proportional success of Bitcoin and Ethereum in the market. After analyzing the data, he concluded that $15 billion in investment in the first 18 months is a reasonable forecast, although it could be higher or lower.

He added that he was shocked that the narrative of high correlation persisted. He explained that cryptocurrencies were only correlated for 5% of their history, particularly during a period when the Fed made historic interest rate adjustments and implemented the largest QE ever.

Naturally, everything was correlated for a few months, but 95% of the time, cryptocurrencies were uncorrelated. He pointed out that adding cryptocurrencies to a portfolio and rebalancing leads to higher risk-adjusted returns, higher yields, and equal or lower volatility.

“If you want to be underweight cryptocurrencies, great, but if you don’t have any, you’re missing out on a huge chunk of the market. It would be like owning the market without owning Nvidia, and nobody would want to do that today,” Hougan said.

Read also: Ethereum Price Drop: Will This Key Level Trigger a Bounce?

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