Ethereum ETFs’ staking approval may not boost inflows as expected, says analyst Eric Balchunas. Without a sustained price rally for Ether, inflows will likely remain weak. Historical spikes correlate with price surges, but ETH currently struggles to maintain momentum. Stakeholder attention is on SEC’s upcoming decisions regarding staking effectiveness.
The approval of staking for spot Ether exchange-traded funds (ETFs) in the United States might not significantly boost inflows unless Ethereum witnesses a consistent rally, as noted by Bloomberg ETF analyst Eric Balchunas. He expressed concerns that without a sustained increase in price, the anticipated inflows may remain subdued.
In a recent episode of the New Era Finance Podcast, Balchunas pointed out that while staking might be beneficial, its impact will likely be “a little.” He added, “it’s only going to help — it can’t hurt.” Since the US launch of Ether ETFs in July, the market has struggled, largely because Ethereum’s price hasn’t enjoyed that long overdue rally.
Balchunas highlighted that Ethereum struggles with performance, stating, “It just doesn’t ever go on a nice long rally.” He pointed to the significant inflows that occurred when Ethereum’s price spiked in December 2022, where a correlation was clear; the price jumped 71% following Donald Trump’s win, sending ETH up to $4,107.
During that rally, from November 22 onward, spot Ether ETFs saw a hearty inflow streak lasting 19 days, amassing around $2.44 billion, as data from Farside reveals. However, following that peak, Ethereum entered a downward trend, falling approximately 56% to trade around $1,809 at the time of writing.
For the inflows to rise again, Balchunas argues Ethereum needs not only a sustained price increase but also a compelling narrative. “It needs something that is more than just a good week here and there,” he said.
Comparatively, after the launch of Ether ETFs, their performance faltered quickly, creating challenges for recovery. Balchunas contrasted this with spot Bitcoin ETFs, which boasted an entirely different trajectory, where Bitcoin set a new all-time high just two months after their launch in January 2024.
With discussions ongoing about permission from the US Securities and Exchange Commission for Ethereum ETFs to offer staking, the timeline is uncertain. According to fellow Bloomberg analyst James Seyffart, while there are possibilities of early approval, the final deadline sits at October’s end. Intermediate decisions may come as early as late May or August, pending the application review.
In conclusion, the road ahead for Ethereum ETFs appears rocky without significant price momentum and narrative reinvigoration. Investors and stakeholders alike remain watchful for upcoming decisions from the SEC and the overarching market landscape.
