Joseph Lubin, co-founder of Ethereum and CEO of blockchain technology firm Consensys, has expressed that the potential approval of spot Ethereum ETFs by the US Securities and Exchange Commission (SEC) could lead to significant supply constraints for Ether. This development is anticipated to be a “watershed” moment for Ethereum.
In an exclusive interview with DL News, Lubin predicted that the approval of spot Ethereum ETFs will unlock substantial institutional demand. Given that many institutions have begun their crypto investments with spot Bitcoin ETFs, Ethereum is naturally the next substantial asset for diversification.
“There’s going to be a pretty large amount of natural, pent-up pressure to purchase Ether” through these ETFs, Lubin commented. However, he also noted that the situation for Ethereum differs significantly from that of Bitcoin because of the underlying supply dynamics.
A major factor distinguishing Ethereum from Bitcoin in the context of ETF creation is the availability of the assets. On-chain data indicates that more than 27% of all Ether is staked across various protocols on the Ethereum network. These funds are locked in contracts and are contributing to the network’s security and operations, thus they are not readily available for market trading.
“Much of the Ether is put to work in the core protocol, DeFi systems, or in DAOs,” Lubin explained. This structural difference means that there is less Ether available for ETF providers to purchase and allocate to new ETF shares.
Related Reading
In August 2021, the Ethereum network’s EIP 1559 introduced a burning mechanism where a portion of the Ether used for transaction fees is permanently removed from circulation. This deflationary mechanism is designed to balance Ether supply growth and potentially increase its scarcity over time.
As network activity increases—potentially spurred further by new institutional interest in Ethereum through ETFs—this burn mechanism will gradually reduce the available supply, adding another layer to the potential supply crunch. “This could be a pretty profound watershed moment”, Lubin said.
Ethereum Price Targets And Doubts
The market impact of an approved Ethereum spot ETF could be significant. Crypto analyst Miles Deutscher projected a possible scenario where Ethereum could see a price surge similar to that experienced by Bitcoin following its own ETF approval.
According to Deutscher’s analysis, “BTC…
Click Here to Read the Full Original Article at NewsBTC…
