Why does Ethereum ETP perform beyond expectations? Ethereum ETP investment value analysis

Why does Ethereum ETP perform beyond expectations? In last week’s investment memo, I predicted that Ethereum ETPs would bring in $15 billion in net inflows by the end of 2025. This would be a huge achievement, and the Ethereum ETP could become one of the most successful ETPs of all time.

However, Ethereum ETP still cannot match Bitcoin ETP. Less than six months after its listing, the Bitcoin ETP has already attracted $14 billion in net inflows. I expect that number to soar to over $50 billion by the end of 2025, with the addition of financial giants like Morgan Stanley and Merrill Lynch.

In terms of market capitalization, Bitcoin is 3 times the size of Ethereum, so it makes sense for Bitcoin ETPs to attract three times the funds of Ethereum ETPs.

But something has been stuck in my mind since I wrote that memo. If things had gone the other way, Ethereum ETPs might have performed far beyond my expectations.

What is the future of Ethereum ETP? Will the value of Ethereum ETP skyrocket? Let’s learn more about it with the editor of this site!

Ethereum is like a high-growth tech stock

Naive investors (and some in the media) confuse Bitcoin and Ethereum. It’s easy to see why: they are the two largest crypto assets. But our readers should know that, like gold and oil, they are fundamentally different.

By design, Bitcoin is a new type of monetary asset. It is designed to compete with gold, the U.S. dollar, and other fiat currencies as a store of value and, ultimately, a medium of exchange.

This is an exciting field. The gold market is worth over $10 trillion, and the “currency” market is the largest in the world. If Bitcoin successfully enters these markets, its value will still increase by 10x or more.

Ethereum is completely different. Ethereum is structured as a technology platform: it is a fully programmable blockchain that is the cornerstone of new crypto applications such as tokenization, stablecoins, and decentralized finance.

The economics of Ethereum are simple: All else being equal, as more people use these applications, the value of the Ethereum blockchain’s asset, ETH, will grow. Because you have to pay ETH to use the platform.

Leading blockchain use cases, source: Bitwise Asset Management

Why Ethereum ETP will outperform expectations

This is why I suspect Ethereum ETP may outperform expectations. After all, investors love technology stocks. Nearly all investors are invested in high-growth tech stocks like Nvidia and Meta, while relatively few investors are in monetary assets like gold.

Imagine what would happen if investors sold a handful of tech stocks and added to their holdings of ETH? I think investors prefer to hold technology assets like Ethereum rather than investing in a new currency asset.

So we need to bring mainstream attention to Ethereum’s core idea that ETH is an investment in technology. To do this, we need to accomplish two things: 1) More people need to understand how Ethereum is different from Bitcoin; 2) Some applications built on Ethereum need to gain mainstream attention.

What would that look like? It’s conceivable that stablecoin assets will increase from $160 billion to $1.6 trillion as more people accept the speed and transparency of blockchain payments; or that DeFi will open up new lending and borrowing as regulatory clarity emerges channel; or more companies follow BlackRock’s lead and establish tokenized funds on Ethereum.

Maybe investors need a new ETF that is 10% ETH and 90% tech stocks.

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