Experts Say Ethereum Staking Yields Could Exceed US Rates, Bolstering Prices
FalconX’s Latest Report
Ethereum staking yields are expected to outpace interest rates in 2025, a shift that experts say could boost ETH’s value as investors look for opportunities with higher returns. Analysts from institutional brokerage firm FalconX say that the rising network fees on Ethereum coupled with the Fed’s dovish monetary policies will soon make crypto investments attractive, narrowing the gap between conventional risk-free investments and Ethereum staking yields.
As of today, the spread between the Effective Fed Funds Rate and the Ethereum Composite Staking Rate has been negative over the past 11 months, making traditional investments a safe haven for investors. However, FalconX believes the two mentioned factors will cause a shift in the coming quarters.
In its investor note published on Monday, the institutional brokerage noted that the Federal Reserve will likely continue cutting rates in 2025. It referenced data from the CME FedWatch tool, which showed 85% of traders believe that the Fed funds rate will drop to 3.75% in Q1 of next year and then 3.5% by the end of the second quarter.
Why Investors Could Soon Shift Their Focus to Ethereum DeFi
Lower interest rates will lead to reduced yields on conventional assets such as Treasury bonds, prompting investors to explore other investments. Head of Research at FalconX, David Lawant, says the Ethereum DeFi sector could witness massive adoption if staking rates outpace interest rates in 2025. Currently, staking rates hover around 3.17% per data from Stakingrewards.com.
Furthermore, Lawant expects network/transaction fees on Ethereum to start rising in October due to increased blockchain activity as crypto users prepare for the historical bull period (October to March). If fees increase, validators’ revenue will grow, thus boosting yields for stakers.
Investors Will Opt for Ethereum ETFs, Analyst Claims
Meanwhile, Crypto expert Jamie Coutts has said that investors may opt to invest in recently approved Ethereum spot ETFs rather than staking on DeFi protocols. He argues that most traditional investors will likely prefer injecting funds into regulated products in this bull run. Earlier this year, the US Securities and Exchange Commission gave the green to eight Ethereum spot ETFs, allowing American investors to get exposure to ETH without holding or staking the token.
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