Net inflows into EtherETC-traded funds (ETFs) are gaining momentum and could outperform BitcoinBTCETFs in 2025, according to analysts. As of December 16, Ether ETFs have seen seven straight weeks of net inflows, including a record-breaking $2.2 billion in the week ending November 26. Analysts expect this uptrend to continue into 2025, especially if strong spot ETH price performance enhances ETF returns and regulators allow funds to generate yields from staking.
Analysts’ Outlook
Analysts predict that net inflows into ETH ETFs are currently on pace with those seen in gold ETFs. However, Nate Geraci, president of The ETF Store, expresses optimism, stating that he expects these inflows to accelerate further. Geraci’s prediction is based on the ongoing performance of Ether relative to Bitcoin and potential developments in staking and regulatory environments.
Staking: A Promising Area for Growth
Nate Geraci emphasized the potential role of staking in accelerating future ETF inflows, particularly for US-based Ether ETFs. Staking involves locking ETH as collateral with a validator on the Ethereum network, earning users ETH rewards from network fees and other sources. However, validators face risks such as ‘slashing,’ which could result in the loss of their ETH collateral if they misbehave.
Staking yields for these ETFs are currently offering an annualized percentage return (APR) of approximately 3.35%, denominated in ETH. Geraci notes that staking is likely to be investigated and potentially incorporated into ETF spaces, especially in the US, given its promising returns and regulatory clarity.
Spot Price Performance
Since November, Ethereum (ETH) has outperformed Bitcoin (BTC) in both spot and derivatives markets, according to a December report by Bybit, a cryptocurrency exchange. Meanwhile, BTC ETFs saw the largest net outflows ever on December 19. This divergence highlights the growing disparity between ETH’s performance and that of Bitcoin.
Network Growth and AI Integration
Ethereum’s sustained growth is attributed to increased network activity, particularly due to the proliferation of artificial intelligence (AI) agents. These agents are contributing to higher gas prices and enhanced transaction scalability, further driving interest in ETH as a leading altcoin.
The integration of AI also opens new opportunities for DeFi protocols such as liquidity mining, swaps, and lending services. These developments could further solidify Ethereum’s position as the future platform for decentralized applications (dApps).
Analysis: Solana vs. ETH Ecosystem
Some analysts argue thatSolana’s performance may overshadow Ether in certain markets due to its faster transactions and lower fees. However, others highlight the unique value proposition of the Ethereum ecosystem, particularly its support for DeFi protocols that are increasingly attracting institutional investors.
The growing adoption of tokens like Binance Coin (BNB) and Tether (USDT) also poses a threat to ETH’s dominance in altcoin markets. These developments necessitate continued innovation from protocol developers to maintain market relevance.
VanEck’s Estimates
Vaneck, the creator of the VDW ETF, estimates that approximately $20 billion will be invested in alternative coins by 2025. This projection underscores the growing appeal of cryptocurrencies as a hedge against traditional market volatility and inflation.
Potential for Future Growth
Analysts believe that further growth in the alternative coin market is driven by several factors: increasing adoption of Web3 technologies, rising interest in yield opportunities, and the potential for new protocols to emerge with unique use cases. These trends suggest a promising future for tokens like ETH, USDT, and BNB.
Conclusion
The momentum behind Ether ETFs appears unstoppable, with analysts predicting strong performance in 2025. The integration of staking, continued network growth, and the growing appeal of alternative coins position ETH to remain a dominant force in the cryptocurrency market.
