Ether Yields To Dominate New Crypto Cycle – Bernstein
According to recent research by Bernstein, the persistent pressure on bank deposits with zero yields is expected to persist, enhancing the appeal of Ether (ETH) yields. The latest report from Bernstein comes after the Ethereum network completed the Shanghai update, making Ether yields more attractive to investors.
Increased Demand For ETH Deposits
On-chain data suggests a noticeable shift from bank deposits toward the U.S. Treasury money markets. However, with the increasing integration of the Ether yield economy into the mainstream, analysts Gautam Chhugani and Manas Agrawal believe it is difficult to ignore the growing demand for ETH deposits and yields.
According to Bernstein’s observations, when it comes to the “hierarchy of yields,” investors naturally lean towards money market yields with the highest rates. However, it is worth noting that these yields are denominated in U.S. dollars, which has a fiat currency foundation.
Currently, individuals holding Ether are expected to wait approximately one month to establish themselves as network validators on the Ethereum blockchain. Thus, Bernstein highlighted that if there were to be a sudden economic downturn resulting in lower interest rates and the devaluation of the USD, it would swiftly make ETH yields highly appealing in ETH terms.
Additionally, the report emphasized that ETH yield is denominated in the token, and since the cryptocurrency maintains its deflationary nature, it further enhances its attractiveness as an investment option. The analysts noted that these yields are intricately connected to the level of activity within the Ethereum ecosystem, which is experiencing a steady rise in adoption from retail and institutional investors.
According to the report, the upcoming cycle in the cryptocurrency market will primarily revolve around the concept of yield. Unlike traditional banks that retain most yields, Ethereum distinguishes itself by distributing its earnings among stalkers and maintaining a non-dilutive monetary policy.
Bernstein reported that Ether’s staking trends following the Shanghai upgrade had surpassed initial projections. The percentage of total ETH staked has risen by 2% since the upgrade and now stands at approximately 15%.
ETH Holders Excited Over Month-Long Waiting Time
Digital asset investors seeking to generate yields from their ETH investments face an extended waiting period of approximately one month before being eligible to serve as network validators on the Ethereum platform. According to data from multiple sources, the waiting period for staking Ether is 640 hours, equivalent to around 26 days.
Conversely, exiting the network requires a mere 0.013 hours, less than a minute. Proof-of-stake blockchains, like Ethereum, rely on validators to validate transactions and enhance network security.
Approximately 50,000 validators are queuing up to join the Ethereum network, per the latest data available in May. The data reveals a significant demand for validators to enter the network and capitalize on the nearly 5% annual yield.
This robust demand is primarily driven by the majority of Ether holders who prefer not to liquidate their holdings but rather generate passive income through staking. According to market observers, the upcoming wave of validators is expected to consist of new market participants and previous holders who had temporarily unstaked their Ether from the network to assess the process’s efficiency.
Matt Leisinger, the co-founder of the staking protocol Alluvial, attributed the surge in demand to stakers who had locked in their positions for over 18 months and potentially desired to liquidate their staked ETH holdings after the Shapella upgrade took place. According to Leisinger, the initial demand from the stakers has diminished as they have all completed their exit from their positions.
In recent weeks, there has been a remarkable upsurge in staking deposits. According to data from the on-chain analytics tool Nansen, over 200,000 Ether was deposited into the network last week.
This noteworthy milestone signifies the first instance where deposits have surpassed withdrawals since the introduction of Shapella in the previous month.
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