ConsenSys CEO: Ethereum spot ETF may trigger a "demand surge", leading to ETH supply shortage

According to DL News, Ethereum co-founder and CEO of crypto infrastructure company ConsenSys, Joe Lubin, stated that if an Ethereum spot ETF is approved, the resulting "demand surge" for Ethereum could lead to supply constraints.

Lubin explained that institutions already exposed to Bitcoin through the newly launched Bitcoin ETF are "most likely to want to diversify their investments into the second approved ETF". The demand for purchasing Ethereum through an ETF will be quite large. However, compared with when the Bitcoin spot ETF was approved in January this year, there will be less supply available to meet this demand.

In the case of Bitcoin, authorized participants (i.e., companies that buy Bitcoin on behalf of the ETF every day) can simply purchase idle Bitcoins on exchanges or from over-the-counter trading counterparts. But on-chain data shows that more than 27% of total Ethereum supply has been staked on the Ethereum network. These Ether coins are locked in contracts earning returns for their owners. In other words, not only is Ethereum's market value lower than Bitcoin's - making its price more sensitive to capital inflows - but a significant portion of its supply cannot be used by an ETF. Furthermore, new activities on Ethereum will result in a large amount of existing Ether being destroyed over time further limiting supply.