Crypto

Staked Ether Nears 33.3M ETH High as ETF Approval Looms

Staked Ether Nears Record 33.3M ETH as ETF Approval Expected Soon

By Max Weldon

7/11, 04:21 EDT
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Key Takeaway

  • Staked ether (ETH) is nearing an all-time high at 33.3 million ETH, representing 27.7% of the total supply.
  • The ETH supply is growing again, undermining its "ultra-sound money" narrative; total supply highest since December 11, 2023.
  • Polymarket bettors predict ether ETFs will trade before July 26, with Invesco and Galaxy proposing a 0.25% management fee.

Ether Staking Nears Record High

As the U.S. inches closer to approving an ether (ETH) exchange-traded fund (ETF), the amount of ether staked is approaching a record high. According to Julio Moreno, CryptoQuant's head of research, "The total number of staked ETH has continued to increase and sits near its all-time high as it stands at 33.3 million ETH or 27.7% of the total supply." This significant amount of staked ether helps keep the circulating volume in check, even though the total supply of ETH is growing again.

The increasing supply of ether indicates that it has returned to being an inflationary asset, which could undermine its capability to act as a store of value over time. Moreno noted, "ETH supply is growing again, although slowly. But the narrative of ultra-sound money has ended. The total supply is at its highest level since December 11, 2023." Staking, which locks ether for a fixed period, and burning a portion of transaction fees are mechanisms to counter this inflationary trend.

Liquidity and Usage

Ether's liquidity is also noteworthy, with spot trading volume data showing that ether could be as liquid as bitcoin (BTC). Moreno highlighted that "ETH spot trading volume being 80%-90% of that of bitcoin in the last few weeks." This high liquidity is crucial for the market, as it ensures that large transactions can be executed without significantly impacting the price.

Additionally, data from CoinMetrics reveals that around 12% of ether's supply is being used in smart contracts or bridges that connect different blockchains. When combined with the tokens that are staked, roughly 40% of the cryptocurrency is "locked" and not actively traded. This substantial portion of locked ether reduces the available supply, potentially impacting its price dynamics.

Ether ETF Race Heats Up

The race to launch an ether ETF is intensifying, with Polymarket bettors predicting that these ETFs will begin trading before July 26. Recently, Invesco and Galaxy announced a 0.25% management fee for their proposed spot ether ETFs, slightly higher than VanEck's 0.20%. These fees are critical as they will play a significant role in differentiating products and attracting investors. Management fees cover the maintenance of a fund, including marketing costs, salaries, and custodial services.

Before trading can commence, the U.S. Securities and Exchange Commission (SEC) must provide feedback on the current applications, and issuers need to file final amended forms with fee information and other required details. The SEC seems poised to approve these ETFs, and they could begin trading as soon as this week, although there is no firm timeline for approval. One individual familiar with the process told CoinDesk that they expected the dialogue to continue for a few weeks.

Street Views

  • Julio Moreno, CryptoQuant (Neutral on ETH):

    "The total number of staked ETH has continued to increase and sits near its all-time high as it stands at 33.3 million ETH or 27.7% of the total supply."

  • Julio Moreno, CryptoQuant (Bearish on ETH's store of value capability):

    "ETH supply is growing again, although slowly. But the narrative of ultra-sound money has ended. The total supply is at its highest level since December 11, 2023."