Ether's risk-reward appears attractive as ETF inflows rise

Ether's (CRYPTO:ETH) underperformance compared to Bitcoin (CRYPTO:BTC) may soon be over, according to a recent report by Bernstein.

The brokerage firm noted a shift in ETH's exchange-traded fund (ETF) inflows, indicating a potential reversal of this trend.

On Friday, BlackRock's spot ether ETF saw inflows of $250 million, surpassing the $137 million received by its spot bitcoin ETF.

Bernstein analysts, led by Gautam Chhugani, stated that this creates "favorable demand-supply dynamics for ETH."

The report also highlighted the potential for staking yields to act as another positive factor for Ether's performance.

Bernstein pointed out that earlier ether spot ETF applications did not include yields due to regulatory constraints.

"Under a new Trump 2.0 crypto friendly SEC, ETH staking yield will likely be approved," the report said.

As Ethereum blockchain activity increases, staking yields could grow to an estimated 4-5%, further benefiting the cryptocurrency.

Ethereum's transition to a proof-of-stake consensus mechanism has kept the supply of ether stable at around 120 million tokens.

Transaction fees on the Ethereum network offer a yield of approximately 3% to stakers, and nearly 28% of the ether supply is locked in staking contracts.

Another 10% of the ether supply is tied up in deposit and lending contracts.

"Almost 60% of ether has not changed hands in the last 12 months, which is indicative of a resilient investor base," the report said.

These factors contribute to the positive demand-supply dynamics supporting Ether, according to Bernstein.

The report suggests that Ethereum's continued activity as a platform for tokenisation and stablecoins is another key driver of this trend.

At the time of reporting, the Ethereum (ETH) price was $3,647.73.