Chainalysis predicts that ETH may separate from other cryptocurrencies after the Merge because of its staking payouts, which could resemble bonds or commodities.
The price of Ether (ETH) may decouple from other crypto assets after the Merge, according to crypto analytics company Chainalysis, with staking yields perhaps driving significant institutional adoption.
According to a report released by Chainalysis on Wednesday, the future Ethereum upgrade would give institutional investors access to staking yields comparable to those of some securities, such as bonds and commodities, while also being more environmentally friendly.
Given that treasury bond yields give substantially less, in contrast, the paper stated that Ether staking is likely to pay stakers a 10-15% yield yearly, making ETH an “enticing bond alternative for institutional investors.”
Chainalysis data shows that from fewer than 200 institutional ETH stakers in January 2021 to about 1,100 as of August this year, the number of institutional ETH stakers—those with $1 million or more in ETH staked—has “been gradually expanding.”
Chainanalysis Data Reveals Ether Prices Might Decouple:
According to the company, if this figure rises more quickly after The Merge, this should support the claim that institutional investors “do indeed view Ethereum staking as a good yield-generating strategy.”
The Chainalysis report predicts that after The Merge, ETH will attract more institutional and retail traders because the upcoming upgrade would then make marking a much more appealing investment tool.
ETH that has been staked is currently trapped in a smart contract that will not be released until the Shanghai upgrade, which will occur six to twelve months after the Merge.
Due to the current lack of liquidity in the staked ETH market, some staking service providers provide synthetic assets that approximate the value of the staked Ether. According to the firm, the disadvantage is that “such synthetics don’t always retain a 1:1 peg.”
