Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
In July this year, the U.S. Securities and Exchange Commission (SEC) officially approved the trading application for Ethereum spot ETFs, making ETH the second cryptocurrency after BTC to enter the traditional financial trading market in ETF form.
However, four months have passed, and traditional financial markets have not shown the same enthusiasm for ETH as they have for BTC. The main reason lies in ETH's narrative as a tech innovation product, which is less appealing compared to BTC's 'digital gold'; additionally, continuous selling pressure from Grayscale ETHE and the SEC's restrictions on Ethereum spot ETFs involving staking features have objectively diminished its attractiveness.
For investors in Ethereum spot ETFs, currently holding ETH through ETFs means missing out on staking yields (currently around 3.5%), and additionally, there are management fees of 0.15% to 2.5% payable to the ETF issuer. While some investors may not mind forgoing this yield for convenience and security, undoubtedly some investors will seek alternative solutions or even pause their investment intentions.
With Trump's victory, this situation is now turning around. The market expects the cryptocurrency regulatory environment to improve effectively, and Ethereum spot ETFs are also likely to introduce staking features, thereby amplifying the attractiveness of this investment product and further boosting ETH's strength.
On November 13, ETF issuer Bitwise announced the acquisition of Ethereum staking service provider Attestant. Bitwise CEO Hunter Horsley stated in an interview that currently one-fifth of Bitwise's clients want to earn yield through staking, but in a few years, most clients are expected to have this demand.
On November 20, European cryptocurrency ETP issuer 21 Shares AG announced the addition of staking features to its Ethereum core ETP product, rebranding it as the 'Ethereum Core Staking ETP' (ETHC), which is currently listed on the Swiss Stock Exchange, Germany's Xetra Exchange, and the Amsterdam Euronext Exchange.
On November 22, Gary Gensler, the SEC Chairman seen as a figure opposing cryptocurrency regulation, announced that he would resign on January 20, 2025, further increasing the likelihood of staking features being introduced to Ethereum spot ETFs.
Which crypto assets will benefit?
First, the introduction of staking features in Ethereum spot ETFs will directly benefit ETH — this will directly amplify the investment appeal of Ethereum spot ETFs, perhaps one reason for ETH's recent relative strength.
Moreover, this shift will indirectly benefit the staking sector and the higher-level re-staking sector.
In the staking sector, Lido (LDO), Rocket Pool (RPL), Ankr (ANKR), and Frax (FXS) have recently gone through a long consolidation period and have begun to show some upward momentum.
Both LDO and RPL deserve special mention. In June this year, the SEC sued Lido and Rocket Pool, claiming that the stETH and rETH issued by the two platforms constituted securities, causing a short-term plunge for LDO and RPL. With Gensler's departure, it is expected that this lawsuit will be resolved more amicably.
In the re-staking sector, EigenLayer (EIGEN) rebounded strongly after last week's embarrassing record low, temporarily holding the critical position of $3 despite a significant pullback in BTC. As a cornerstone protocol in the sector, EIGEN's subsequent performance is expected to greatly influence the market performance of ecological projects like ether.fi (ETHFI), Renzo (REZ), and Puffer (PUFFER).
In addition to such crypto assets, other companies providing staking services will also attract larger business opportunities from the introduction of staking features in Ethereum spot ETFs, such as Coinbase (COIN), which is already listed on the U.S. stock market. As a major custodian service provider for Bitcoin and Ethereum spot ETFs, Coinbase also issues liquid derivative tokens like cbETH. Although there is currently no definitive news, it is expected that some ETF service providers will prefer to continue choosing Coinbase's services.
Business connections are limited, emotion-driven dominance
Looking at the recent market performance, ETH, the staking sector's LDO and RPL, and the re-staking sector's EIGEN and ETHFI have all achieved relatively good rebounds.
However, even if the Ethereum spot ETF is confirmed to introduce staking features, it may be challenging for this business to flow towards stETH, rETH, eETH, and other native liquid staking tokens (LST) or liquidity re-staking tokens (LRT). ETF issuers may either acquire staking service providers like Bitwise or directly choose reputable platforms like Coinbase as mentioned earlier.
Therefore, ultimately, the rapid rebound of the staking and re-staking sectors is still primarily driven by market sentiment in the short term, and actual business opportunities may be limited... But then again, the most precious thing in a bull market is sentiment, which is not a bad thing for the long-dormant Ethereum ecosystem.
