Despite BlackRock's aggressive promotion of its Ethereum ETF, which has resulted in a notable influx of funds, the price of Ethereum remains stagnant compared to Bitcoin. This discrepancy can largely be attributed to Ethereum's tokenomics and growth scale. High transaction activity results in the perpetual creation of ETH tokens without a corresponding burning mechanism, causing stakers and protocol participants to frequently sell. The ETF appears to facilitate institutional flows towards development rather than benefiting ETH holders directly, emphasizing a need to reconsider how value is derived in the Ethereum ecosystem.
Recent inflows into Ethereum ETFs have been significant, but the underlying mechanics of Ethereum's tokenomics and the nature of institutional investments mean prices may not reflect this.
The primary issue with ETH prices not rising despite strong ETF inflows is the tokenomics of Ethereum, where more tokens are created than can be burned.
Unlike Bitcoin, where scarcity plays a crucial role in price appreciation, Ethereum's utility and transaction model leads to a system where stakers often sell their rewards.
ETF flows primarily support staking and app development, acting as a pass-through rather than benefiting long-term holders of Ethereum tokens.
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