Ethereum Co-founder Joe Lubin Discusses Potential Impact of Approved Ethereum ETFs – What to Expect for ETH

  • Ethereum’s co-founder and CEO of Consensys, Joe Lubin, recently commented on the potential approval of Ethereum ETFs, suggesting a supply squeeze could follow.
  • The SEC appears ready to approve spot Ethereum exchange-traded funds (ETFs), potentially leading to a significant increase in demand for Ethereum.
  • “There will be quite a large amount of natural, suppressed demand to purchase Ethereum through ETFs,” Lubin stated in an interview.

This article explores the implications of the upcoming Ethereum ETFs and how they might lead to a supply squeeze, impacting Ethereum’s market dynamics.

Anticipating the Impact of Ethereum ETFs on Market Supply

Following the approval of Bitcoin ETFs, institutional investors diversified into Bitcoin through these funds. A similar trend is expected for Ethereum, which could intensify if the SEC approves Ethereum ETFs.

Staked Ethereum: A Locked Supply Increasing Scarcity

Current on-chain data shows that over 27% of Ethereum’s total supply is staked in the Ethereum network, yielding returns and thus, is not in circulation. This locked supply could make Ethereum’s price more sensitive to new market entries like ETFs.

The Role of Ethereum’s Burn Mechanism in Reducing Supply

The Ethereum network has implemented a burn mechanism through EIP-1559, which systematically reduces the circulating supply of Ethereum, contributing to its scarcity and potentially increasing its value as demand rises.

Conclusion

The potential approval of Ethereum ETFs represents a pivotal moment for Ethereum and the broader cryptocurrency market. The locked supply and burn mechanisms are likely to play critical roles in Ethereum’s price dynamics as new institutional investments enter the market.

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