Ether (ETH), the second-largest cryptocurrency by market capitalization, has gained significant attention lately, especially in light of recent ETF inflows. Bernstein, a prominent brokerage firm, believes that Ether’s potential for future growth is stronger than ever, especially as it continues to show signs of outperforming Bitcoin (BTC).
Key Factors Driving Ether’s Positive Outlook
Despite Ether’s underperformance compared to Bitcoin in 2024, Bernstein suggests that this phase may soon come to an end. According to a report released on Monday, recent inflows into Ether ETFs indicate a shift in sentiment towards ETH, suggesting that it could soon outpace Bitcoin.
On Friday, BlackRock’s Ether spot ETF saw impressive $250 million in inflows, surpassing the $137 million directed into its Bitcoin spot ETF. This shift in fund flows creates favorable market conditions for ETH, signaling that demand for the cryptocurrency may be set to rise.
The Role of Staking Yields in Ether’s Growth
In addition to ETF inflows, staking yields on the Ethereum blockchain could become a key factor supporting Ether’s price. Bernstein points out that ETH staking has not yet been fully embraced due to regulatory constraints, but with the possibility of a more crypto-friendly SEC under the Trump administration, these yields could become a major driver for ETH in the future.
As Ethereum’s activity increases, the expected staking yield could grow to around 4-5%, making it an even more attractive investment. Furthermore, Ethereum remains the preferred platform for asset tokenization and stablecoins, reinforcing its dominance in the decentralized finance (DeFi) space.
Ethereum’s Stable Supply and Active Network
One of the key strengths of Ether is its limited supply. After Ethereum transitioned to a proof-of-stake consensus mechanism, the total supply of Ether has remained static at 120 million tokens. Approximately 28% of Ether’s supply is currently locked in staking contracts, while an additional 10% is tied up in deposit and lending contracts.
Ethereum’s transaction fees, which offer around 3% yield to stakers, ensure that a significant portion of Ether’s total supply remains locked, supporting its price stability. Bernstein also notes that nearly 60% of Ether has remained dormant for the past 12 months, indicating a strong and resilient investor base, which further supports the cryptocurrency’s long-term viability.
Ether’s Bullish Prospects
Although Ether has lagged behind Bitcoin in 2024, recent developments, such as increased ETF inflows and the potential for staking yield growth, suggest that ETH is poised for a potential resurgence. As the Ethereum blockchain continues to expand and remain at the forefront of DeFi and stablecoin development, Ether’s risk-reward profile appears increasingly favorable for long-term investors.
