According to CoinDesk: The amount of ether (ETH) staked is approaching an all-time high, as the market eagerly anticipates the approval of an ether exchange-traded fund (ETF) in the U.S. Polymarket bettors currently assign a 90% probability that an ether ETF will be approved by July 26, although several regulatory steps remain before trading can commence.

Current Staking and Supply Dynamics

According to data from CryptoQuant, the total number of staked ETH is nearing its highest levels, with 33.3 million ETH, or 27.7% of the total supply, currently staked. This staking activity helps to keep the circulating volume in check, even as the overall supply of ETH increases.

Julio Moreno, CryptoQuant's head of research, highlighted in a note shared with CoinDesk that the increasing supply of ether indicates a return to its status as an inflationary asset. However, mechanisms such as staking, which locks ether for fixed periods, and burning—a process that permanently removes a portion of transaction fees from circulation—help to mitigate this inflationary pressure.

"ETH supply is growing again, although slowly. But the narrative of ultra-sound money has ended. The total supply is at its highest level since December 11, 2023," Moreno wrote.

Market Liquidity and Usage

Moreno also pointed out that ether's spot trading volume is comparable to that of bitcoin (BTC), with ETH's spot trading volume reaching 80%-90% of BTC's over the last few weeks. This data underscores ether's significant liquidity in the market.

Data from CoinMetrics further reveals that around 12% of ether's supply is used in smart contracts or blockchain bridges. Combined with the staked tokens, approximately 40% of ether is "locked" and not actively traded.

Path to ETH ETF Approval

The potential approval of an ether ETF has generated considerable excitement. Polymarket bettors are optimistic that trading will begin before July 26. Recently, Invesco and Galaxy announced a management fee of 0.25% for their proposed spot ether ETFs, slightly higher than VanEck's 0.20%.

Before these ETFs can start trading, the U.S. Securities and Exchange Commission (SEC) must provide feedback on the current applications, and issuers need to submit final amended forms with fee information and other required details.

Comparative Performance Outlook

On the Kalshi prediction market, bettors assign a 65% chance that ether will outperform bitcoin, though they are 95% confident that ether will not reach an all-time high before bitcoin does.

 

As the deadline for potential ether ETF approval approaches, the cryptocurrency market is closely monitoring staking levels and supply dynamics. The increasing amount of staked ETH and the anticipation of ETF approval reflect a robust interest in ether, with significant implications for market liquidity and investor strategies.