Ethereum is expected to become more efficient and attract more users after the Shanghai upgrade. However, a new report suggests the opposite.
JPMorgan’s report reveals that Ethereum has experienced a decline in daily activity and total value locked (TVL) post-Shanghai. Specifically, daily transactions have decreased by 12%, daily active addresses have dropped by nearly 20%, and TVL has decreased by almost 8%.
In another report by Glassnode Alerts, Ethereum gas consumption has decreased by 99.99% since the Merge while the network’s gas fee has also significantly declined. JPMorgan’s report suggests that the drop in daily activity may contribute to the decreased demand for gas usage.
On the other hand, Ethereum staking has gained momentum since the Merge unlocked the staked ETH.
JPMorgan’s analyst and Managing Director Nikolaos Panigirtzoglou wrote that while the transition from Proof-of-Work to Proof-of-Stake reduced the network’s energy consumption by over 99% and the supply of Ethereum is shrinking, staking has increased sharply. However, network activity has not increased as much as expected.
ETH Price Below $1,600
Ethereum’s price dropped from $1,665 earlier this week to $1,597 on Friday. Other altcoins were slightly down as well while Bitcoin fell below $26,600. Bitcoin’s market capitalization currently stands at $519 billion, accounting for 49.2% of the cryptocurrency market.
Lately, there has been a focus on ETH futures exchange-traded funds (ETF) and spot Bitcoin ETF filings. These applications are expected to drive cryptocurrency adoption. Some early applicants include ARK 21Shares, Volatility Shares, Roundhill, Bitwise, ProShares, and Grayscale.
Grayscale recently joined the queue of investment companies seeking approval. They submitted an application to the U.S. Securities and Exchange Commission (SEC) for a new ETF product called the Grayscale Ethereum Futures Trust ETF. The aim is to list the ETF on the New York Stock Exchange Arca under Rule 8.200-E.
This move came after Grayscale won a lawsuit against the SEC regarding their proposal to convert the Bitcoin Trust product to a spot ETF. The SEC is now required to review Grayscale’s proposal.
Is a Bitcoin ETF Coming?
Prior to Grayscale, digital asset manager Valkyrie filed for an Ethereum futures ETF with the SEC in mid-August. Bloomberg previously reported that the SEC was likely to approve the first futures Ether ETFs, generating optimism within the Ethereum market.
There is a significant demand for a Bitcoin ETF, which is why many major firms are keen to launch one.
Currently, the SEC is reviewing two applications for Ethereum ETFs. They have assessed applications from asset management companies ARK Invest and VanEck for spot ETFs. The public has a 45-day period to provide comments on these applications, expressing their opinions on whether the SEC should grant or deny approval and outlining the potential advantages and risks associated with these financial products.
The ARK 21Shares Ethereum ETF is a collaboration between ARK Invest, a large investment firm with $60 billion in assets, and 21Shares, a digital asset management company offering cryptocurrency ETPs in Europe. This ETF aims to correlate the price of Ethereum using the CME CF Ether-Dollar Reference Rate (ETHUSD_RR).
However, the review process does not guarantee approval for the ETFs, and approval is not necessarily more likely. Even Ethereum futures ETFs have not received SEC approval yet, with expectations for potential approval set for October.