Key Findings
The approval of staking for spot Ether index funds (ETFs) in the U.S. may have minimal impact on inflows unless Ether sees sustained gains, says Eric Balchunas.
ETH significantly dropped in price after the launch of the ETFs last year, unlike spot Bitcoin ETFs, which saw new all-time highs just two months after their launch.
For inflows to increase again, Balchunas said ETH would need a multi-month rally along with a strong narrative.
Spot Ethereum ETFs that manage to stake a portion of the tokens under their control may not help attract inflows without a more sustained price increase, says Bloomberg ETF analyst Eric Balchunas.
Balchunas said in an episode on April 29 of the New Era Finance Podcast that the approval of staking for Ether (ETH) ETFs would have "some" impact on inflows, adding "it will only help - it can't hurt."
ETFs performing well in price rallies
However, Balchunas noted that one of the main reasons for the weak inflows in Ether ETFs since their launch in July in the U.S. is that ETH has yet to sustain a prolonged rally.
"The biggest problem with Ethereum is the performance; it simply never enters a good prolonged rally."
He added that when the price of Ether surged during a rally in December, there was a direct correlation with an increase in inflows.
Donald Trump's victory in the November elections triggered a crypto market surge that saw ETH rise 71% to reach $4,107 on December 16.
As of November 22, spot Ether ETFs experienced a sequence of 19 days of positive inflows, accumulating approximately $2.44 billion in inflows, according to Farside data.
However, since hitting the price level of $4,107, Ether has entered a downtrend and has since fallen 56% to trade around $1,809 at the time of publication, according to CoinMarketCap data.
Balchunas said that for inflows to increase again, Ether would need a "multi-month rally" combined with a "strong narrative."
"It needs something that is more than just a good week here and there," he added.
Balchunas noted that after the launch of the Ether ETFs, the price "fell quickly," making any recovery difficult, unlike spot Bitcoin ETFs, which saw Bitcoin (BTC) reach a new all-time high just two months after its launch in January 2024.
"When you launch an ETF, and you have this kind of performance right off the bat, it's tough," he said.
U.S. ETF issuers are still waiting for the U.S. Securities and Exchange Commission to allow Ether ETFs to offer staking after filing numerous permission requests earlier this year.
The Bloomberg ETF analyst, James Seyffart, said that "it is possible that they may be approved for staking soon, but the final deadline is at the end of October."
"Possible intermediate deadlines before final approval (or denial) are at the end of May and the end of August," he added.
