Ethereum Gains Spotlight as Potential ‘Institutional Darling,’ According to Bernstein

Following Bitcoin’s impressive rally driven by the introduction of exchange-traded funds (ETFs), attention is turning towards Ethereum (ETH), the second-largest cryptocurrency, according to a research report. The report contends that Ethereum is “probably the only other digital asset likely to get a spot ETF approval by the SEC.”

Bernstein assigns a 50% chance of Ether spot ETF approval by May, with a near-certain probability of approval within the next 12 months. Various traditional finance firms are now seeking approval for an Ether ETF in the U.S., including Franklin Templeton, Blackrock (BRK), and Fidelity, which have already secured approval for Bitcoin ETFs.

The report emphasizes Ethereum’s favorable characteristics, such as staking yield dynamics, an environmentally friendly design, and institutional utility for constructing new financial markets, positioning it for mainstream institutional adoption.

Analysts highlight the potential growth of Ether yield markets parallel to the cryptocurrency’s market cap, suggesting that including staking yields in ETF design could power unique ETFs. The report notes that institutions are not just aiming to launch Ether spot ETFs but also to “build more transparent and open tokenized financial markets on the Ethereum network,” emphasizing the utility beyond asset gathering.

Ethereum’s upcoming upgrade, Dencun, scheduled for March, is expected to significantly reduce transaction costs by providing a dedicated corridor and blockspace for roll-ups, potentially making transactions 50%-90% cheaper, as per the report.