Ethereum price held steady during the weekend as investors reacted to the decision by the Securities and Exchange Commission (SEC) to approve a set of spot Ethereum ETFs last week. The ETH token was trading at $3,930 on Monday morning, its highest swing since March 21st. Here are the reasons why you might consider the iShares Ethereum Trust ETF (ETHA).
Ethereum outperforms Bitcoin
The first reason to consider the iShares Ethereum Trust is that ETH has a long history of beating Bitcoin. As shown below, Ethereum has soared by over 28,000% since 2016 while Bitcoin has jumped by about 12,000% in the same period.
This year, the same trend has continued as Ether has jumped by almost 70% while Bitcoin is up by about 55%. This performance typically happens because the two assets are closely correlated and that Ether has a lower notional price value than BTC. ETH trades at $3,930 while Bitcoin hovers near $70,000, making it more affordable to most investors.
Therefore, while past performance is not always a good indicator of the future, investing in a winner rather than a laggard makes sense.
Ethereum supply is running out
The second reason to invest in the iShares Ethereum Trust is that Ether exchange balances are running out. Data by CryptoQuant shows that these balances have been in a strong downward trend for a long time. They have now tumbled to about 13.6 million, the lowest level in years.
As we have seen with Bitcoin and industrial metals, assets do well when the supply is running out. Therefore, I suspect that there will be more demand for Ether when these ETFs start trading in the coming days.
Ethereum’s market share
Further, unlike most cryptocurrencies, Ethereum is used widely, has a large market share, and generates a lot of fees. Ether dominates most blockchain industries like Decentralized Finance (DeFi), Non-Fungible Tokens (NFT), and tokenization.
Data shows that Ethereum has a total value locked (TVL) of over $66 billion, giving it a dominance of over 68%. The biggest players in the ecosystem are the likes of Lido, AAVE, Maker, and Uniswap. Also, the network has over $80 billion in stablecoins.
Ethereum also makes huge sums of money because of its higher fees. It has generated over $1.27 billion in revenue this year, much higher than Tron’s $617 million and Solana’s $92 million.
While the NFT industry is likely dead, Ethereum still has a leading market share. Data by CryptoSlam shows that Ethereum has handled over $171 million in NFTs in the past 30 days, a figure higher than most networks.
Ethereum has led these industries even though other networks are better. Blockchains like Solana, Avalanche, and Cronos have substantially lower fees and faster transaction processing.
Therefore, if cryptocurrencies continue rising, there is a possibility that the iShares Ethereum ETF will do well. ETHA will make Ethereum more accessible to big investors who have always resisted the token because of the difficulty of dealing with private keys.
If you are an individual trader, however, it makes sense to invest in Ethereum directly because of its staking feature. In addition to benefiting from the price flows, you will also benefit from the monthly distributions.
