An expert at the renowned asset management firm Bernstein believes that Ethereum presents an appealing risk-to-reward ratio, especially considering its recent underperformance compared to other cryptocurrencies. Gautam Chhugani, the managing director of Bernstein’s global digital assets division, highlights several key factors contributing to Ethereum’s potential.
Chhugani points out that Ethereum’s total supply has remained relatively stable since the network shifted to proof-of-stake and implemented a burn mechanism. This stability, combined with the steady yield of around 3% for Ethereum stakers, has resulted in approximately 28% of ETH supply being locked in staking contracts. Additionally, another 10% of ETH is locked in Deposit/Lending contracts on the blockchain and bridged to layer-2 chains. With approximately 60% of ETH not changing hands in the last year, there is evidence of a resilient investor base, creating a favorable demand-supply dynamic for ETH.
Furthermore, Ethereum exchange-traded funds (ETFs) are gaining traction, which could further bolster the asset’s demand-supply dynamics. Chhugani speculates that ETH ETFs may soon incorporate staking yield, pending regulatory approval. With a potentially more crypto-friendly SEC in the future, the inclusion of ETH staking yield in ETFs could be on the horizon.
In terms of blockchain activity, Ethereum continues to dominate, accounting for 63% of total value locked (TVL) in blockchains. TVL represents the amount of capital deposited within a protocol’s smart contracts and serves as a measure of the crypto ecosystem’s health. While Solana has attracted more retail users, Ethereum maintains its lead with institutional investors.
As of the latest update, Ethereum is trading at $3,583, showcasing its resilience and potential for growth in the market. With a combination of strong fundamentals, growing institutional interest, and potential regulatory developments, Ethereum remains a prominent player in the cryptocurrency space.
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