An analyst from asset management giant Bernstein, Ethereum $3,727He stated that (ETH)’s risk-reward ratio “looks attractive” due to ETH’s recent poor relative performance.
Ethereum’s Supply Status
Gautam Chhugani, managing director of Bernstein’s global digital assets division, noted that total supply has remained largely static since the Ethereum network transitioned to proof-of-stake and adopted the burn mechanism.
He emphasized that Ethereum’s transaction fees provide a tidy return of around 3% to those staking ETH, resulting in approximately 28% of the ETH supply being locked in staking contracts. Additionally, approximately 10% of ETH is bridged in Deposit/Lending contracts on the blockchain and layer-2 networks.
“Ethereum’s infrastructural transaction fees provide a tidy return of around 3% to those staking ETH. This leaves approximately 28% of ETH supply locked in staking contracts.” – Gautam Chhugani
The Rise of Ethereum ETFs
Chhugani noted that Ethereum exchange-traded funds (ETFs) are gaining momentum, which could further strengthen the asset’s demand-dynamics. He also suggested that ETH ETFs may soon include staking returns.
“The ETH ETF approval excluded the ability of asset managers to offer underlying ETH returns to ETH ETF holders due to regulatory limitations. “We think ETH staking yield will likely be approved under the new crypto-friendly SEC.” – Gautam Chhugani
Finally, he noted that Ethereum’s blockchain activities are increasing, accounting for 63% of the network’s total value locked (TVL). TVL refers to the amount of capital invested in a protocol’s smart contracts and is used to measure the health of the crypto ecosystem.
While the analyst acknowledged that Solana (SOL) is ahead in terms of individual users, he noted that Ethereum is ahead on the institutional side.
Ethereum’s supply and demand dynamics appear to be positive overall. High staking rates and the rise of ETFs give positive signals for the future performance of ETH. Additionally, the high TVL rate on the Ethereum network indicates that the ecosystem is healthy and supports continued institutional interest.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
