According to CryptoQuant's data, although the supply of the altcoin king Ethereum (ETH) is increasing, the staked amount is approaching record levels. As discussions about a spot exchange-traded fund (ETF) progress in the US, Polymarket bettors are pumping confidence into the market about ETF approval, with bettors saying there is a 90 percent chance of approval by July 26. There are currently a few regulatory steps remaining before spot Ethereum ETF trading can begin.

27.7 Percent of Total Supply Has Been Stake

With the potential approval of a spot Ethereum ETF in the US, the amount of ETH staked has approached an all-time high, helping to maintain circulating supply despite increasing total supply. CryptoQuant's research manager, Julio Moreno, emphasized that the total staked amount of ETH is 33.3 million, or 27.7 percent of the total supply, indicating that a significant portion of ETH's supply is staked.

While increased supply may indicate ETH's return to an inflationary asset, potentially weakening its ability to act as a long-term store of value, interest in staking is counteracting these negatives. Staking and burning transaction fees in the Ethereum ecosystem are two mechanisms used to counter this inflation. For those who don't know, the process of staking means locking ETHs for a fixed period of time, while burning transaction fees is the process of permanently removing some of the ETHs received from users as transaction fees from circulation.

Moreno added that although ETH's supply is increasing, the narrative of it being an "ultra-sound money" is over. While total supply is currently at the highest level since December 11, 2023, ETH remains liquid and spot trading volume has risen to 80-90 percent of Bitcoin (BTC) in recent weeks.

CoinMetrics data reveals that approximately 12 percent of ETH's supply is used in smart contracts, or bridges that connect different blockchains. This figure, when combined with staked ETH, means that approximately 40 percent of the circulating supply is “locked” and not actively traded, which affects its liquidity and trading dynamics.

All Eyes on Spot Etheruem ETFs

On the other hand, Invesco and Galaxy's announcement of a 0.25 percent management fee, slightly higher than VanEck's 0.20 percent, for spot Ethereum ETFs, which they are awaiting approval by submitting to the SEC, indicates that competition in the field of spot Ethereum ETFs has increased. This led to comments that it would be busy. However, the SEC must first provide feedback on the applications pending before it and submit final amended forms with necessary details before issuers initiate trading.

While bettors on the Kalshi platform give a 65 percent chance that Ethereum will outperform Bitcoin after ETF approval, they are 95 percent sure that Ethereum will break a record by reaching an all-time high before Bitcoin. This is important as it reflects ongoing market sentiment and expectations regarding the future performance of the two leading cryptocurrencies.