Bernstein analysts have observed a “solid revival of interest” in Ethereum, citing its strong fundamentals despite a year-to-date performance lag behind Bitcoin. While Ethereum has gained approximately 59% this year, Bitcoin has surged 124% over the same period.
However, Ethereum’s recent performance is showing promise. In the last 30 days, Ethereum has risen by 46%, outperforming Bitcoin’s 41% increase, suggesting a potential resurgence.
Several key factors are fueling this optimism, including robust staking dynamics, stable transaction fees, and growing institutional interest, especially through exchange-traded funds (ETFs). Analysts note that while Ethereum faces competition from faster networks like Solana and challenges from fragmented Layer 2 solutions, its supply-demand fundamentals remain favorable.
Currently, 28% of Ethereum’s supply is locked in staking contracts, providing an annual return of 3%, while an additional 10% is tied up in lending or bridged to Layer 2 chains. Furthermore, nearly 60% of Ethereum’s supply has not been traded in over a year, indicating strong investor commitment.
Institutional interest in Ethereum is accelerating, with Ethereum ETFs seeing significant inflows. Assets under management in these ETFs have reached $11 billion, with recent net inflows reversing the trend of outflows from Grayscale’s ETFs.
Looking ahead, Bernstein sees potential for further momentum, particularly if regulatory approval allows asset managers to incorporate Ethereum staking yields into ETFs. This could boost returns to 4-5%, spurred by increased blockchain activity.
Ethereum’s scalability, especially through Layer 2 solutions, is also driving significant blockchain activity. Daily transactions on Layer 2 chains have surpassed 15 million, compared to just 1 million on Ethereum’s base layer.
With Ethereum maintaining a 63% share of total value locked in blockchains, the cryptocurrency continues to earn high trust from both retail whale and institutional investors.
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