Ether’s risk-reward balance is attractive, according to Bernstein, with recent inflows into ETH exchange-traded funds suggesting that its underperformance may be coming to an end. The Ethereum blockchain activity is increasing, and the supply of ether has remained stagnant at 120 million tokens since the transition to proof-of-stake.
Analysis of “Ether’s Risk-Reward Is Attractive” Article by Bernstein
Introduction
The article discusses the current state of the Ethereum market, highlighting the attractive risk-reward ratio for investors.
Underperformance of Ether
According to the report, ether (ETH) has underperformed its rival bitcoin (BTC) year-to-date. However, recent inflows into ETH exchange-traded funds (ETFs) suggest that this period of underperformance may be coming to an end.
Favorable Demand-Supply Dynamics
The broker noted that Blackrock’s spot ether ETF saw $250 million in inflows on Friday, compared to only $137 million for the asset manager’s larger spot bitcoin ETF. This creates favorable demand-supply dynamics for ETH.
Staking Yields as a Tailwind
Staking yields could be another factor contributing to the attractiveness of Ethereum. Bernstein noted that initial ether spot ETF applications did not include yields due to regulatory limitations. However, under a new SEC regime, staking yield approval is likely, and the yield can grow to 4-5% as activity on the Ethereum blockchain increases.
Blockchain Activity
Ethereum blockchain activity is increasing, with the network remaining the platform of choice for asset tokenization and stablecoins.
Supply Dynamics
The report highlighted that the supply of ether has remained stagnant at a total of 120 million tokens since Ethereum’s transition to proof-of-stake. This, combined with transaction fees delivering a yield of around 3% to stakers, keeps about 28% of ether supply locked in staking contracts.
Investor Base
Almost 60% of ether has not changed hands in the last 12 months, indicating a resilient investor base and reinforcing positive demand-supply dynamics for the cryptocurrency.
Recent Underperformance May Be Over
Ethereum Blockchain Activity Increasing
Recent Ethereum ETF Inflow Streak
A recent streak of inflows into Ethereum ETFs sets up ETH for new lifetime highs, according to traders. This could be a sign that the period of underperformance is coming to an end.
Note: The above content is a rephrased version of the provided documents and does not include any additional information or conclusions not present in the original context.
- coindesk.com | Ethers Risk Reward Is Attractive, Bernstein Says
- yahoo.com | Ethers Risk Reward Is Attractive, Bernstein Says
