Analysts noted that the short-term rally will not have a significant impact on Ethereum ETF inflows.
Ethereum will have to achieve several months of sustained strong performance to attract institutional capital inflows.
The success of the spot Bitcoin ETF shows the importance of sustained gains, but the Ethereum ETF has so far failed to replicate this success.
Ethereum ETF staking: Short-term performance is unlikely to shake capital flows
Bloomberg ETF analyst Eric Balchunas expressed a cautious view on the future of Ethereum, noting that unless Ethereum can continue to rise for several months, even if a spot Ethereum ETF staking is approved in the United States, it will not generate huge capital inflows.
In a recent (New Era Finance Podcast), Balchunas revealed that although the staking function of the Ethereum ETF has been approved, this move will only have a "slight" impact on capital inflows. He said that Ethereum needs more than just a few weeks of good performance, but to show sustained strong growth in order to attract more institutional funds to participate.
The Success of Spot Bitcoin ETFs: Contrasting Ethereum’s Short-term Dilemma
In sharp contrast to the performance of the Ethereum ETF is the performance of the Bitcoin ETF. Just two months after the Bitcoin ETF was listed in January 2024, the price of Bitcoin hit a record high, which fully demonstrates the importance of a strong upward trend to capital inflows.
However, after Ethereum's price surged in December 2024, it immediately entered a downward channel, falling 56% from its all-time high of $4,107, causing a sharp slowdown in capital inflows. Balchunas pointed out that the main reason for the weak inflow of funds into the Ethereum ETF since its listing in July is that the price of Ethereum has failed to rise continuously.
Ethereum’s “Flaw”: Lack of a Long-Term Uptrend
According to Balchunas' analysis, the fundamental problem of Ethereum is its weak performance and its failure to form a lasting upward trend. He added that in December 2024, as the price of Ethereum soared, the inflow of funds also reached a peak, especially after Trump's victory in November, which triggered a carnival in the crypto market. However, the subsequent price correction prevented Ethereum from maintaining the momentum of capital inflow.
Fund inflow data:
From November 22 to December 16, the spot Ethereum ETF achieved net capital inflows for 19 consecutive days, absorbing approximately US$2.44 billion.
However, after a pullback from its all-time high of $4,107, the inflow has failed to recover and the Ethereum price is currently hovering around $1,809.
Future Outlook: When will the staking function of the Ethereum ETF be launched?
Despite the poor performance of spot Ethereum ETFs, the market is still looking forward to the arrival of the staking function. The U.S. Securities and Exchange Commission (SEC) is reviewing a series of applications for Ethereum ETF staking functions, and it is expected that this function will be finally approved before October.
James Seyffart, an ETF analyst at Bloomberg, revealed that the staking function may be approved in advance, but the end of May and the end of August will be the key time nodes. If this function is approved, it will inject new vitality into the Ethereum market and bring more capital inflows.
Continued growth is the key to Ethereum’s capital inflow
At present, short-term price fluctuations have little impact on the inflow of funds into the Ethereum ETF. Whether it can attract more funds in the future depends on whether it can show a sustained upward momentum. In contrast, the Bitcoin ETF has successfully attracted a large amount of funds through continuous increases, and Ethereum must achieve similar sustained growth to truly get out of trouble and attract institutional investors.
This analysis shows that the future inflow of funds to Ethereum depends on whether it can achieve sustained growth, rather than just a short-term price rebound. This process takes time and requires a strong market narrative, which is precisely the missing factor at present.
