The experts at Bernstein express optimism about Ethereum’s (ETH) future, pointing to a potential approval of US ETH ETF staking during the current administration as a significant driver of growth.
Additionally, the research and brokerage firm highlights three other factors that could positively influence the altcoin’s performance, characterizing its recent underperformance as a promising opportunity for investors.
One section of the analysts’ assessment, headed by Gautam Chhugani, reads as follows:
“Given Ethereum’s recent underperformance, the risk-reward ratio appears appealing.”
Prospects of Ethereum ETF Staking Approval
While Hong Kong’s ETH ETF allows staking, the US has not yet authorized staking yield for such products. However, the analysts suggest that this scenario may change in the near future, potentially providing an attractive yield amidst interest rate cuts by the Federal Reserve.
“The approval of ETH staking yield could be on the horizon. We anticipate that, with a more crypto-friendly SEC under a revised Trump administration, ETH staking yield might receive the green light. Given the decrease in interest rates, the current 3% ETH yield might become quite appealing.”
In a similar vein, Galaxy Digital’s Mike Novogratz previously forecasted a comparable timeline ranging from mid-2025 to 2026.
The analysts also suggest that ETH staking yield, which currently stands at 3%, could rise to 4-5% post the approval of ETF staking, potentially drawing increased institutional interest towards the altcoin.
“Integrating the ETH yield aspect into ETFs could offer asset managers a margin, enhancing ETF viability and serving as an additional incentive to promote ETH ETF adoption as institutional investment managers expand their exposure to digital assets.”
Positive Trends in ETH ETF Flows
Bernstein identifies positive ETH ETF flows as well as strong demand and supply dynamics as key catalysts for Ethereum’s growth. Out of the total circulating supply of 120 million ETH, 28% is currently staked (approximately 34.6 million ETH), with an additional 10% (12 million ETH) locked in deposit and lending platforms.
Despite these figures, 60% of the ETH supply remains untouched over the past year, reflecting what the analysts describe as a steadfast investor base and favorable demand-supply balance.
Moreover, ETH ETF flows have turned positive and even surpassed BTC ETFs for the first time. Although the ETF experienced negative net flows since its inception, this trend reversed in November, potentially bolstering Ethereum’s demand-supply equilibrium according to Bernstein’s analysis.
Lastly, Bernstein underscores the significant level of trust from both major retail and institutional investors in the Ethereum network, which could further fuel ETH’s ascent. The firm emphasizes Ethereum’s Total Value Locked (TVL) at around 60% ($89 billion) as evidence of institutional players’ confidence.
With its current value at $3.6K, reflecting a 47% increase over the past month, Ethereum’s future looks promising.