Ethereum Price Forecast: SEC interest in crypto staking could drive massive inflows into ETH ETFs
Ethereum price today: $2,740
- The SEC shows a strong interest in crypto staking after acknowledging 21Shares’ request to permit staking in its Ethereum ETF.
- Staking could stir massive inflows into Ethereum ETFs as it is the major value proposition of ETH.
- Ethereum could flip to a bullish market structure if it breaks above a descending channel.
Ethereum (ETH) is up 1% on Thursday following news of the United States (US) Securities & Exchange Commission's (SEC) rising interest in crypto staking. Approval of staking within US spot Ethereum ETFs could make them attractive to investors and drive massive inflows for issuers.
Ethereum could be largest beneficiary from SEC's new interest in crypto staking
The new SEC administration under acting Chair Mark Uyeda is showing a strong interest in crypto staking and could issue guidance on the subject soon, according to Fox Business Eleanor Terrett in a Thursday's X post.
The agency is actively engaging on the concept, requesting that the crypto industry provide a memorandum explaining the different types of staking and their advantages.
Staking is the process of earning passive returns by using crypto tokens to contribute to a blockchain network's security.
Ethereum infrastructure provider Consensys lawyer Bill Hughes also stated that the company is working with the Proof-of-Stake Alliance (POSA) to provide the SEC with an analysis of different staking offerings and how they're affected by securities laws.
The move aligns with SEC Commissioner Hester Peirce's statement on February 4 stating the agency's new crypto task force will assist in helping "to modify certain features of existing exchange-traded products, including to allow for staking and in-kind creations and redemptions."
The SEC had earlier acknowledged 21Shares' proposal to allow for staking within its Ethereum ETF.
Staking within Ethereum ETFs would allow issuers to help investors earn yield on their ETH holdings.
If approved, staking could drive massive inflows to Ethereum ETFs, considering it's one of the major value propositions of ETH.
Nate Geraci, President of the ETF Store, has previously predicted that Ethereum ETFs could surpass Bitcoin ETFs if the SEC permits asset managers to stake their holdings.
Currently, over 28% of the total ETH circulation is in staking protocols, per CryptoQuant data
The latest development marks a U-turn from the SEC's position under previous Chair Gary Gensler. The agency reportedly delayed engaging with Ethereum ETF applications until issuers removed staking from their offerings.
Meanwhile, Ethereum ETFs recorded $19 million in net inflows on Wednesday, continuing their impressive performance in February, per Coinglass data.
The inflows are potentially driven by institutional investors who upped their ETH ETF holdings from 4.8% to 14.5% in the last quarter.
Ethereum Price Forecast: ETH bulls could continue to gather momentum if descending channel support holds strong
Ethereum saw $22.19 million in futures liquidations in the past 24 hours, per Coinglass data. The total amount of long and short liquidations accounted for $10.55 million and $11.64 million, respectively.
ETH is up 2% in the past week, moving range-bound within the $2,500 and $2,850 boundary as the crypto market awaits a price catalyst.
ETH/USDT daily chart
The descending channel extending from December 17 is key to watch amid the choppy market. If the lower boundary line of the channel holds strong, ETH bulls could continue to gather momentum for a potential upward spring.
A breakout from the channel while holding its upper boundary as a support will flip the ETH market toward a bullish structure.
Meanwhile, ETH bears continue to outweigh bulls near the $2,850 level. The $2,850 level proved a critical resistance for four months — between August and November — until the Trump presidential election win triggered a crypto rally. Without a strong market catalyst, ETH will likely remain subdued by sellers whenever it approaches this level.
The Relative Strength Index (RSI) is trending upward but below its neutral level, while the Stochastic Oscillator (Stoch) is above its midline. This indicates that bullish momentum is gradually growing.
A daily candlestick close below $2,200 will invalidate the thesis and send ETH to find support near the $1,500 level.
Ethereum FAQs
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Its native currency Ether (ETH), is the second-largest cryptocurrency and number one altcoin by market capitalization. The Ethereum network is tailored for building crypto solutions like decentralized finance (DeFi), GameFi, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), etc.
Ethereum is a public decentralized blockchain technology, where developers can build and deploy applications that function without the need for a central authority. To make this easier, the network leverages the Solidity programming language and Ethereum virtual machine which helps developers create and launch applications with smart contract functionality.
Smart contracts are publicly verifiable codes that automates agreements between two or more parties. Basically, these codes self-execute encoded actions when predetermined conditions are met.
Staking is a process of earning yield on your idle crypto assets by locking them in a crypto protocol for a specified duration as a means of contributing to its security. Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism on September 15, 2022, in an event christened “The Merge.” The Merge was a key part of Ethereum's roadmap to achieve high-level scalability, decentralization and security while remaining sustainable. Unlike PoW, which requires the use of expensive hardware, PoS reduces the barrier of entry for validators by leveraging the use of crypto tokens as the core foundation of its consensus process.
Gas is the unit for measuring transaction fees that users pay for conducting transactions on Ethereum. During periods of network congestion, gas can be extremely high, causing validators to prioritize transactions based on their fees.
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