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Yahoo
3 days ago
- Business
- Yahoo
Ethereum ETF Flows in August Blow Past Post-Merge Token Issuance
Spot Ethereum exchange-traded funds are generating outsized inflows in the U.S. as the asset's price surges toward all-time highs, offsetting years of ETH issuance. So far this month, spot Ethereum ETFs have attracted $2.3 billion—the equivalent of 500,000 ETH—while the network has issued 450,000 ETH since the so-called merge occurred in September 2022, according to crypto data providers CoinGlass and Ultrasound Money. The "merge" was a major network upgrade that ended Ethereum's energy-intensive mining requirements. Invest in Gold American Hartford Gold: #1 Precious Metals Dealer in the Nation Priority Gold: Up to $15k in Free Silver + Zero Account Fees on Qualifying Purchase Thor Metals Group: Best Overall Gold IRA The seven-day trading stretch has also coincided with the products' best day on record, with investors allocating $1 billion across nine spot Ethereum ETFs on Monday. Although Ethereum treasury companies like BitMine Immersion Technologies and SharpLink Gaming have recently stepped into the spotlight as a new source of demand for Ethereum, accumulating billions of dollars' worth of ETH at a rapid pace, they have played more of a complementary role in recent months, according to analysts at investment bank Standard Chartered. While penciling in a year-end price target of $7,500 for Ethereum, the analysts noted that Ethereum treasury firms have bought 2.3 million ETH, or 1.9% of the asset's circulating supply, since June, while ETFs have attained 3.8% of ETH's circulating supply over the same period. 'Based on publicly announced plans by the treasury companies, we think their ETH buying is likely to continue, and we see potential for Ethereum treasury companies to increase their holdings to 10% of all circulating ETH,' the analysts added. Ethereum Could Soar to $25,000 by 2028: Standard Chartered Ethereum changed hands around $4,740 on Tuesday while showing a 5% increase over the past day, according to crypto data provider CoinGecko. Despite hitting $4,000 in December, the asset has yet to eclipse its pandemic-era high near $4,900 in 2021—though this is the closest it's been since late that year. At the time, Ethereum's consensus model mirrored Bitcoin's, where computers constantly crunched complex calculations to keep the network secure and reward miners with newly issued ETH. That changed in 2022, when staking became a core part of how Ethereum keeps itself secure. Network participants are rewarded with ETH for participating in the process of validating transactions through staking. Ethereum's supply is not fixed at 21 million like Bitcoin's, but increases are theoretically capped at 1.5% per year, if all Ethereum were ever staked. In practice, Ethereum's supply has increased only 0.13% since the merge in September 2022. On average, around 683,000 Ethereum—worth $1.8 billion, based on current prices—is burned each year, or removed from circulation, as a result transaction fees for users on the network, who are either moving cryptocurrencies or engaging with autonomous, smart contract-powered apps. With the recent passage of stablecoin legislation, some analysts are expecting a dramatic surge of dollar-pegged tokens on Ethereum, as Wall Street firms introduce their own products. 'Stablecoins account for 40% of all blockchain fees today, and Ethereum is home to just over half of all stablecoins,' Standard Chartered analysts wrote. 'We project that the stablecoin sector will grow [...], which would have a significant direct impact on fees.' Myriad users believe that Ethereum will not only hit an all-time high in 2025, but continue on to hit $5,000 for the first time, currently giving it a nearly 87% chance of happening. (Disclosure: Myriad Markets is a product of DASTAN, Decrypt's parent company.)
Yahoo
22-03-2025
- Business
- Yahoo
Why Ethereum Is Lagging Bitcoin—Analysts Cite Inflationary Problems, Dencun Upgrade Blowback, And Solana's Meme Coins
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Ethereum (CRYPTO: ETH), the second-largest cryptocurrency by market capitalization, has charted a diametrically opposite trajectory when compared to its older sibling, Bitcoin (CRYPTO: BTC), over the past year. Consider this. Bitcoin has jumped 32% in a year, reaching an all-time high of $109,000. Its share in the overall cryptocurrency market has expanded from 52% to 60%. Ethereum, on the other hand, contracted 39% during the same time, reducing its market share from 16% to 8%. The widening gap has sparked discussions about Ethereum's role in the cryptocurrency hierarchy and its future course Benzinga spoke to a few analysts to understand the factors contributing to the ecosystem's ongoing downturn. Don't Miss: 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. You can invest today for just $0.26/share with a $1000 minimum. Hasbro, MGM, and Skechers Trust This AI Marketing Firm — Invest Pre-IPO from $0.55 per share. Jeffrey Hu, Head of Investment Research at digital asset manager HashKey Capital, believed the fault lies in Ethereum's economic model. "The activation of EIP-1559 allows more Ether to be burned for deflation when Ether activity is high on Ethereum; however, in order to further support on-chain applications, Ethereum must scale," Hu stated. The Ethereum London Hard fork, dubbed EIP-1559, introduced a token burn mechanism for the network. Under this mechanism, the base fee, i.e., the minimum fee per transaction, is removed to add deflationary pressure to ETH and boost its value. So, what exactly is the problem? Hu asserted that the rise of Layer-2 blockchains and the Dencun Upgrade, which slashed fees on L2s by orders of magnitude, diverted on-chain activity away from the base Ethereum chain, resulting in inflation. Trending: Coinbase's latest promo gets you up to $200 in crypto (Seriously!) — According to Ultrasound Money, ETH's deflation rate started slowing down in May 2024, and since early February, the coin's supply has been net increasing. Source: Ultrasound Money Trever Koverko, Web3 investor and co-founder of Sapien, echoed these observations. "Ethereum is struggling to establish a narrative around how L2's are accretive and not extractive to the main chain," he added. However, L2s were not the only competition that Ethereum encountered. "Ethereum is also not doing well in terms of community culture. In contrast, Solana clearly places more emphasis on meme coin community culture, which has attracted more application development and on-chain transactions," Hu said. Over the past year, Solana (CRYPTO: SOL) has indeed become a meme coin hotspot, helped by its user-friendly meme coin generator In fact, President Donald Trump and First Lady Melania Trump also chose Solana to launch their Official Trump (CRYPTO: TRUMP) and Official Melania (CRYPTO: MELANIA) coins, worth remembering that Ethereum remains the only cryptocurrency other than Bitcoin to have its spot exchange-traded fund on Wall Street, however, inflows have been relatively subdued. Himanshu Maradiya, Founder & Chairman, CIFDAQ Global, stated this is due to a lack of a clear consensus on Ethereum's narrative. 'Lacking a pure store-of-value proposition and often perceived as the "middle child" of the crypto ecosystem, Ethereum struggles to capture the same institutional confidence,' Maradiya argued. He also noted that the absence of staking rewards has made Ethereum ETFs less appealing, which may be remedied given that fresh applications have been filed to allow them. A spokesperson for the Ethereum Foundation—a non-profit dedicated to promoting and developing Ethereum-related technologies—declined to comment on ETH's shrinking market share but said that their focus remained on ecosystem development and research. Image via Shutterstock Read Next: BlackRock is calling 2025 the year of alternative assets. One firm from NYC has quietly built a group of 60,000+ investors who have all joined in on an alt asset class previously exclusive to billionaires like Bezos and Gates. Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Last Chance to get 4,000 of its pre-IPO shares for just $0.26/share! This article Why Ethereum Is Lagging Bitcoin—Analysts Cite Inflationary Problems, Dencun Upgrade Blowback, And Solana's Meme Coins originally appeared on Sign in to access your portfolio
