Ethereum (ETH) rose 1% on Thursday as the US Securities and Exchange Commission (SEC) displayed growing interest in crypto staking. The approval of staking within US spot Ethereum ETFs could make them more attractive to investors and lead to significant inflows for issuers.
Ethereum Could Be the Biggest Beneficiary of SEC's New Interest in Crypto Staking
According to a post on X by Fox Business reporter Eleanor Terrett, the new leadership at the SEC under Acting Chair Mark Uyeda has shown strong interest in crypto staking and may soon issue guidance on the topic.
The agency is actively engaging with the concept and has requested a memo from the crypto industry explaining different types of staking and their benefits.
Staking is the process of earning passive income by contributing crypto tokens to help secure a blockchain network.
Bill Hughes, an attorney for Ethereum infrastructure provider Consensys, also stated that the company is collaborating with the Proof of Stake Alliance (POSA) to provide the SEC with an analysis of different staking products and how they are impacted by securities laws.
This move aligns with a statement made by SEC Commissioner Hester Peirce on February 4, indicating that the agency's new crypto working group would assist in "modifying certain features of existing exchange-traded products, including allowing staking and in-kind creation and redemption."
The SEC had previously acknowledged a proposal from 21Shares to allow staking within its Ethereum ETF.
Enabling staking in Ethereum ETFs would allow issuers to help investors earn yield on their ETH holdings.
If approved, staking could attract substantial inflows into Ethereum ETFs, as it is one of the primary value propositions of ETH.
Nate Geraci, President of ETF Store, previously predicted that Ethereum ETFs could surpass Bitcoin ETFs if the SEC allows asset managers to stake their holdings.
According to data from CryptoQuant, over 28% of the ETH circulating supply is currently held in staking protocols.
This latest development marks a shift in the SEC's stance under former Chair Gary Gensler. The agency reportedly delayed engagement with Ethereum ETF applicants until issuers removed staking from their products.
Meanwhile, Ethereum ETFs recorded $19 million in net inflows on Wednesday, continuing a strong performance in February, according to data from Coinglass.
These inflows may be driven by institutional investors, who increased their ETH ETF holdings from 4.8% to 14.5% last quarter.
Ethereum Price Prediction: ETH Bulls May Continue Gaining Momentum if Descending Channel Support Holds
According to Coinglass, Ethereum saw $22.19 million in futures liquidations over the past 24 hours. Total long and short liquidations amounted to $10.55 million and $11.64 million, respectively.
Over the past week, ETH rose 2%, oscillating within a range between $2,500 and $2,850 as crypto markets await a price catalyst.
The descending channel extending since December 17 is a key pattern to watch amid market volatility. If the channel's lower boundary holds strong, ETH bulls may continue gaining momentum, preparing for a potential upward breakout.
A break above the channel, turning its upper boundary into support, would shift ETH's market structure to bullish.
However, ETH bears continue to dominate near the $2,850 level. This level acted as key resistance for four months (August to November) until a wave of crypto buying was triggered by news of the US presidential election outcome. In the absence of a strong market catalyst, ETH may face selling pressure as it approaches this level.
The Relative Strength Index (RSI) is rising but remains below the neutral level, while the Stochastic Oscillator (Stoch) sits above the midline. This suggests that bullish momentum is gradually building.
A daily candle close below $2,200 would invalidate this bullish outlook and could send ETH looking for support near $1,500.
Frequently Asked Questions
What is Ethereum and how does it work?
Ethereum is a decentralized, open-source blockchain with smart contract functionality. Its native currency, Ether (ETH), is the second-largest cryptocurrency and the leading altcoin by market cap. The Ethereum network is tailored for building crypto-based solutions like decentralized finance (DeFi), GameFi, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs). It enables developers to deploy applications without a central authority using the Solidity programming language and the Ethereum Virtual Machine.
What are smart contracts?
Smart contracts are publicly verifiable, self-executing pieces of code that automate agreements between two or more parties. They automatically perform encoded actions once predetermined conditions are met, enabling trustless and decentralized transactions.
What is staking in Ethereum?
Staking is the process of locking up idle crypto assets in a protocol to earn yield while helping to secure the network. Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism on September 15, 2022, in an event known as "The Merge." PoS lowers the barrier to entry for validators and is a key part of Ethereum's roadmap toward scalability, decentralization, and sustainability.
What is gas and why does its cost fluctuate?
Gas is the unit that measures the transaction fees users pay to execute operations on the Ethereum network. During periods of network congestion, gas fees can rise significantly, leading validators to prioritize transactions based on the fees users are willing to pay.
How might SEC approval of staking in ETFs impact Ethereum?
Approval could make Ethereum ETFs far more attractive to investors, as staking is a core value proposition of ETH. It could drive substantial institutional inflows and enhance the utility of ETF-held Ethereum. 👉 Explore more strategies for crypto yield generation
What are the key technical levels to watch for Ethereum?
Traders are closely monitoring the descending channel formed since mid-December. A breakout above the channel could signal a shift to a bullish structure, while a break below key support near $2,200 might lead to a test of lower levels. Sustained trading above $2,850 would be a strongly bullish signal.