Ethereum ETF staking will have little impact without multimonth rally: Analyst

Key takeaways

• Approving staking for spot Ether exchange-traded funds (ETFs) in the US may have a minimal impact on inflows unless Ether sees a sustained rally, says Eric Balchunas

• ETH dropped significantly in price after the launch of the ETFs last year, unlike spot Bitcoin ETFs, which saw new all-time highs just two months after launching.

• Balchunas said that for inflows to increase again, ETH would need a multimonth run and a strong narrative.

Spot Ethereum ETFs being able to stake a portion of the tokens under their control may not help garner inflows without a more sustained rally in the token’s price, says Bloomberg ETF analyst Eric Balchunas.

Balchunas said on an April 29 episode of the New Era Finance Podcast that staking being approved for Ether (ETH) ETFs would have “a little” impact on inflows, adding “it’s only going to help — it can’t hurt.”

However, Balchunas noted that one of the main reasons for the weak inflows into Ether ETFs since their July launch in the US is that ETH has yet to sustain a prolonged rally.

He added that when Ether’s price surged during a run in December, there was a direct correlation with an increase in inflows. 

Donald Trump’s election win in November sparked a crypto market rally which saw ETH surge 71% to reach $4,107 on Dec. 16. 

From Nov. 22, spot Ether ETFs saw a 19-day positive inflow streak, amassing approximately $2.44 billion in inflows, according to Farside data.

However, since tapping the $4,107 price level, Ether entered a downtrend and has since fallen 56% to trade around $1,809 at the time of publication, according to CoinMarketCap data.

Balchunas said that for inflows to pick up again, Ether would need a “multimonth run” paired with a “strong narrative.”

“It needs something that is more than just a good week here and there,” he added.

Balchunas noted that after the Ether ETFs launched, the price “went down quickly,” making any recovery difficult, unlike spot Bitcoin ETFs, which saw Bitcoin (BTC) hit a new all-time high just two months after they launched in January 2024.

“When you launch an ETF, and you have that sort of performance out of the gate, it’s tough,” he said.

Related: Ethereum’s ‘capitulation’ suggests ETH price is undervalued: Fidelity report

US ETF issuers are still waiting for the US Securities and Exchange Commission to allow Ether ETFs to offer staking after filing numerous requests for permission earlier this year

Bloomberg ETF analyst James Seyffart said that “it’s possible they could be approved for staking early, but the final deadline is at the end of October.”

“Potential intermediate deadlines before the final approval (or denial) are in late May and late August,” he added.

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