23 Jul, 2024
- Ethereum spot ETF inflows are expected to be limited compared to Bitcoin spot ETFs
- No Ethereum staking rewards are on offer, ETH supply is unlimited
Ethereum spot ETFs are set to begin trading today, giving a larger audience a second cryptocurrency exchange-traded fund to look at after Bitcoin spot ETFs hit the market in early January this year. All nine ETFs start trading today and while there is likely to be demand for these products, it is unlikely to be on the same scale as the Bitcoin spot ETF launch.
There remain a number of major differences between Bitcoin and Ethereum with BTC seen as digital money while ETH is seen as a global application platform. The supply of Bitcoin is fixed at 21 million, while Ethereum’s supply is technically unlimited. The fixed issuance/halving of Bitcoin is seen as a major selling point, while the ability of the Ethereum Foundation to issue new ETH if/when needed reduces the scarcity factor and allure for some investors. In addition, current holders of Ethereum tokens are able to ‘stake’ their tokens, while the new ETFs do not have a staking option due to SEC concerns.
Ethereum’s staking system offers users an opportunity to actively participate in network security while earning rewards. Ethereum holders can stake their ether tokens, contributing to the operation and security of the network. In return for their participation, stakers receive new ether tokens and transaction fees, effectively a yield on their staked money. The current Ethereum staking yield is around 3.2%.
With a new flow of demand expected, Ethereum is likely to move higher but gains may be limited in the short-term as other macro drivers dominate the landscape, in particular the upcoming US elections. In the longer term, and especially if spot ETH staking is approved, the price of Ethereum should move higher and break the November 2021, all-time high at $4,898.
Ethereum Weekly Price Chart
