- Ethereum ETFs may grow with the addition of staking yields.
- Staking rewards of 3-5% could make Ethereum ETFs highly appealing in a low-interest-rate market.
Ethereum exchange-traded funds (ETFs) could soon experience significant growth with the integration of staking yields according to analysts at Bernstein. This development is expected to appeal particularly to institutional investors, who are increasingly looking for yield-generating assets in a low-interest-rate environment.
Bernstein’s report also predicts that staking yields for Ethereum ETFs will likely be approved under the incoming Trump administration. Bernstein highlights Ethereum’s robust fundamentals, noting that staking already accounts for 28% of its total supply.
Additionally, Ethereum holds a dominant position in decentralized finance (DeFi), with 63% of the total value locked (TVL) across DeFi platforms. The report suggests that incorporating staking yields, which could range from 3% to 5% annually, would make Ethereum ETFs more appealing, especially to institutions seeking reliable returns.
Ethereum’s transition to a proof-of-stake consensus mechanism further strengthens its investment potential. Bernstein’s report suggests that the potential approval of staking yields for Ethereum ETFs could occur under a crypto-friendly U.S. Securities and Exchange Commission (SEC) shortly.
Is Ethereum Finally Catching Up with Bitcoin in ETF Inflows?
Despite Ethereum’s underperformance in 2024 compared to Bitcoin, Bernstein sees strong growth prospects. Analysts point to a shift in ETF inflows, with Ethereum ETFs recently seeing increased investor interest.
In fact, Ethereum based ETFs attracted $1.1 billion in net inflows since the U.S. election, surpassing Bitcoin ETFs in terms of inflow size on some days. This growth reflects positive demand-supply dynamics for Ethereum, as well as the increasing trust in the blockchain.
Ethereum’s staking rewards provide a predictable income stream, adding to the appeal of its ETFs. As the blockchain continues to see higher levels of activity, the staking yield could rise, offering even more attractive returns. Furthermore, Ethereum’s solid supply dynamics, with a large portion of ETH remaining locked in staking or other contracts, indicate a resilient investor base.
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