ConsenSys CEO: Ethereum spot ETF may create a "demand surge" leading to ETH supply tightness

According to ChainCatcher news, Joe Lubin, co-founder of Ethereum and founder and CEO of the crypto infrastructure company ConsenSys, stated that if an Ethereum spot ETF is approved, the resulting "tsunami of demand" for Ethereum could lead to supply shortages.

Lubin explained that institutions that have already been exposed to Bitcoin through the newly launched Bitcoin ETF "are most likely to want to diversify their investments into the second approved ETF," and the demand for purchasing Ethereum through the ETF will be substantial. However, compared to the approval of the Bitcoin spot ETF in January of this year, the supply available to meet this demand will be less.

In the case of Bitcoin, authorized participants (i.e., companies that purchase Bitcoin on behalf of the ETF daily) can simply buy idle Bitcoin on exchanges or through over-the-counter counterparts. However, on-chain data shows that over 27% of the total Ethereum supply is already staked on the Ethereum network. This Ethereum is locked in contracts to earn yields for its owners. In other words, not only is Ethereum's market value lower than Bitcoin's, making its price more sensitive to capital inflows, but a significant portion of its supply is unavailable for ETF use. Additionally, new activities on Ethereum will lead to the network destroying a large amount of existing Ethereum supply over time, further limiting supply.