According to recent data from CryptoQuant, Ethereum’s (ETH) supply is on the rise, while the amount of staked ETH is nearing unprecedented levels. As debates around a spot exchange-traded fund (ETF) in the U.S. progress, market sentiment is bolstered by a 90% probability of approval by July 26, according to bettors on Polymarket. Only a few regulatory hurdles remain before spot Ethereum ETF trading can commence.
27.7% of Total Supply Staked
The possible approval of a spot Ethereum ETF in the U.S. has driven the staked ETH amount to an all-time high, helping to balance the circulating supply despite the overall increase. Julio Moreno, CryptoQuant’s research director, noted that 33.3 million ETH, or 27.7% of the total supply, is currently staked. This significant portion of ETH’s supply being locked in staking reflects strong market participation.
Despite the rising supply, which hints at ETH becoming an inflationary asset, the interest in staking helps counteract potential negatives. Staking and burning transaction fees are mechanisms within the Ethereum ecosystem aimed at fighting inflation. Staking involves locking ETH for a fixed period, while burning transaction fees permanently removes a portion of ETH from circulation.
Moreno pointed out that the narrative of “ultra-sound money” for ETH has ended, with the total supply peaking since December 11, 2023. Nonetheless, ETH remains highly liquid, with recent spot trading volumes reaching 80-90% of Bitcoin‘s (BTC). CoinMetrics data shows approximately 12% of ETH’s supply is utilized in smart contracts or blockchain bridges, which, together with staked ETH, means about 40% of the circulating supply is locked, influencing liquidity and trading dynamics.
Eyes on Spot Ethereum ETFs
Spot Ethereum ETFs from Invesco and Galaxy await SEC approval, sparking discussions about fierce competition in this space. VanEck recently announced a slightly higher management fee than Invesco and Galaxy’s 0.20%, setting theirs at 0.25%. The SEC must provide feedback on these applications, and issuers need to submit final amendments with required details before trading can start.
Key Takeaways for Investors
– Around 27.7% of Ethereum’s total supply is staked.
– Staking and fee-burning mechanisms are vital in countering ETH’s inflationary trend.
– Approximately 40% of the circulating ETH supply is locked, impacting market liquidity.
– Intense competition exists among firms awaiting approval for spot Ethereum ETFs.
– Market sentiment heavily favors Ethereum’s performance post-ETF approval.
On the Kalshi platform, bettors rate Ethereum’s chances of outperforming Bitcoin post-ETF approval at 65%, and 95% believe Ethereum will achieve an all-time high before Bitcoin, highlighting the optimistic market expectations for Ethereum’s future performance.