The New Crypto Cycle Will Be About Ether Yields: Bernstein

Ether staking trends following the Shanghai upgrade have beaten expectations, the report said.

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Pressure on zero-yield generating bank deposits is expected to continue, which makes ether (ETH) yields more attractive, Bernstein said in a research report on Monday.

Currently, the flight is from bank deposits to the U.S. Treasury money markets, but as the ether yield economy becomes more mainstream, “it is hard not see more demand for ETH deposits and ETH yields,” analysts Gautam Chhugani and Manas Agrawal wrote.

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  • Bernstein notes that in the “hierarchy of yields,” money market yields at peak rates are the obvious choice for investors, but these are in U.S. dollars, a fiat currency base.

    Ether holders are seeing nearly one month waiting period for setting up as network validators on Ethereum.

    “Any hard landing leading to a decline in rates and USD debasement would immediately make ETH yields in ETH terms extremely attractive,” the note said. Ether yield is denominated in ETH, and the cryptocurrency continues to remain deflationary, the note added.

    These yields are directly linked to Ethereum ecosystem activity, which continues to see increased adoption from both retail and institutional investors, the analysts wrote.

    “The new crypto crypto cycle will be about yield this time,” the report said. Banks make money by not sharing yields with savers, “Ethereum shares all that it makes with stakers and does not dilute its monetary policy,” the report added.

    Ether staking trends post the Shanghai upgrade have beaten expectations, Bernstein said, with the amount of ether staked as a percentage of total ETH reaching around 15%, an increase of 2% since the upgrade, addressing any concerns of a supply overhang.

    Edited by Parikshit Mishra.

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    Will Canny is CoinDesk's finance reporter.


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