Analysts at CryptoQuant suggest that Ether could surpass USD 5,000 due to strong institutional demand and increased network activity. Speculation is mounting that Microsoft will invest in an Ethereum ETF after it rejected a proposal to add Bitcoin to its balance sheet. Staking has the potential to lower Ethereum ETFs’ management fees and make them more competitive against Bitcoin ETFs, but SEC regulations currently hinder this development.
CryptoQuant has released a report stating that Ethereum’s ETH could rise above US$5,000 (AU$7.8,000) thanks to institutional investor demand and network activity.
The company said inflows into the Spot Ethereum exchange-traded fund (ETF) “set a new record” with investors injecting more than US$1.9 billion (A$2.98 billion) into the fund in the past 13 days, totaling a total net asset value of The total amount was US$13.18 billion. (According to SoSo Value data) (AU$20.69B).
Related article: Bitcoin regains $100,000 amid optimistic CPI data and cautious Fed stance
Additionally, Ethereum notes that activity is increasing, with total daily transitions averaging between 6.5 million and 7.5 million for most of the year. In 2023, this number will be rounded to 5 million people per day.
The report states:
Based on valuation metrics, ETH could rise above $5,000 if current supply and demand dynamics continue (…) Increased network activity on Ethereum reflects increased adoption of decentralized applications , which means increased usage and demand for network capabilities.
cryptoquant
Microsoft rejects Bitcoin, considers Ethereum
Microsoft is clearly open to investing in the Ethereum ETF, which is a huge blow to Bitcoin maximalists like Michael Saylor.
However, this is just speculation. It all started when Matthew Sigel, head of digital asset research at VanEck, said on the X Post that Microsoft might consider investing in an Ethereum ETF if it included staking functionality.
This possibility was hinted at after Microsoft CFO Amy Hood's comments at the company's annual shareholder meeting, where the Bitcoin proposal was overwhelmingly rejected (less than 1% of shareholders voted in favor). This is a tough no).
Hood said Microsoft has accepted crypto payments since 2014 and views crypto as an asset class, but stressed that its investment priorities are focused on liquidity, capital preservation, and income generation. .
Staking, the missing part of the Ethereum ETF
However, things could get even more complicated given that the Securities and Exchange Commission (SEC) is requiring staking functionality to be removed from Ethereum ETFs, primarily due to regulatory and compliance concerns. And why? That's simply because the SEC considers staking services to be an offering of unregistered securities. Classic SEC.
While this position may change under the SEC's new administration, it will still be complicated for the SEC to permit staking services as a new regulatory framework will be required. Additionally, current Spot Ethereum ETFs process redemptions within 24 hours, while staking often includes a lock-up period.
Related: Citi Report Highlights Role of Stablecoins in Strengthening USD
However, generally speaking, integrating staking services into Ethereum ETFs can primarily lower management fees significantly, making them more attractive to investors by combining income generation with minimal costs. This will be a huge advantage.
Analysts also suggest that this could make Ethereum ETFs more competitive against Bitcoin ETFs, which currently dominate the market. For example, Nate Geraci, president of ETF Store, predicts that Ethereum ETFs with staking capabilities will become a matter of “not if, but when.”
