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The recent rally of the cryptocurrency Bitcoin (BTC) was marked by the spectacular introduction of exchange-traded funds (ETFs). Global asset management firm Bernstein stated in a research report published on Monday that it might be Ethereum’s (ETH) turn, the second-largest cryptocurrency, to gain similar attention. According to the firm, Ethereum could become a darling for institutional investors.
Ethereum Takes Center Stage in Report
The report by the company emphasized that the cryptocurrency Ethereum is “likely the only digital asset besides Bitcoin that could potentially receive a spot ETF approval from the SEC.” Bernstein estimates that there is about a 50% chance of a spot Ethereum ETF approval by May and nearly certain approval within the next 12 months.
Several traditional finance firms are competing for an Ethereum ETF in the US. These developments are a positive sign for Ethereum in the medium term. Firms like Franklin Templeton, Blackrock (BRK), and Fidelity, all of which already have SEC-approved Bitcoin ETFs, are among those applying for an Ethereum ETF.
Institutional Benefits Possible
Analysts Gautam Chhugani and Mahika Sapra noted that “Ethereum is well-positioned for mainstream institutional adoption with its stake yield dynamics, eco-friendly design, and corporate utility in building new financial markets.” The analysts pointed out that Ethereum yield markets are expected to grow in line with the cryptocurrency’s market value and that “including stake yields in ETF design could power unique ETFs.”
Bernstein also mentioned that institutions are not only interested in launching spot Ethereum ETFs but also in creating more transparent and open tokenized financial markets on the Ethereum network. They further emphasized that the benefits created could extend beyond the total asset value.
The report also highlighted Ethereum’s next planned upgrade in March, named Dencun, which is expected to reduce transaction costs by 50-90% by providing a dedicated corridor and block space for rollups. Ethereum, the leader of the altcoins, had surpassed a critical resistance level at the time of writing. Ethereum is trading at $2,911.
