Ethereum Post-Shanghai Activity Slumps, According to JPMorgan

Ethereum is expected to be more efficient and thus attract more users after the Shanghai upgrade. However, a new report shows the opposite.

According to a report by JPMorgan, Ethereum has seen drops in daily activity and total value locked (TVL) post-Shanghai. In detail, the daily transactions have been down 12%, the daily active addresses have dropped by nearly 20%, and the TVL has dropped by almost 8%.

Glassnode Alerts previously reported that Ethereum gas consumption has plummeted by 99.99% since the Merge. In addition to this decrease, the network’s gas fee has drastically declined. JPMorgan’s report suggests that the drop in daily activity may also be contributing to this decreased demand for gas usage.

On the other hand, Ethereum staking has gained momentum since the Merge unlocked the staked ETH.

Nikolaos Panigirtzoglou, an analyst and Managing Director at JPMorgan wrote that following the transition from Proof-of-Work to Proof-of-Stake, which reduced the network’s energy consumption by more than 99%, the supply of Ethereum is shrinking and staking has increased sharply, but 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. Amid a market reversal, other altcoins were slightly down while Bitcoin fell below $26,600. Bitcoin’s capitalization today dropped to $519 billion at the time of writing, accounting for 49.2% of the cryptocurrency market.

Recently, a wave of ETH futures exchange-traded funds (ETF) and spot Bitcoin ETF filings have been in the focus. These applications are believed to help drive more adoption of cryptocurrency. Some early applicants are ARK 21Shares, Volatility Shares, Roundhill, Bitwise, ProShares, and Grayscale.

Grayscale joined the queue of investment companies seeking approval. On September 19, Grayscale submitted an application to the U.S. Securities and Exchange Commission (SEC) for a new ETF (Exchange-Traded Fund) product.

The proposed ETF, known as the Grayscale Ethereum Futures Trust ETF, aims to be listed and have its shares traded on the New York Stock Exchange Arca under Rule 8.200-E.

The move came after Grayscale won the lawsuit against the SEC regarding the firm’s proposal to convert its Bitcoin Trust product to a spot ETF. Upon the court ruling, the securities agency is requested to review Grayscale’s proposal.

Is a Bitcoin ETF Coming?

Before Grayscale, the digital asset manager Valkyrie filed for an Ethereum futures ETF with the SEC in mid-August. Bloomberg previously reported that the SEC was poised to green-light the first futures Ether ETFs, generating significant optimism within the Ethereum market.

There would be huge demand for a Bitcoin ETF, which is why so many major firms want to launch one.

The SEC is currently in the process of reviewing two applications for Ethereum ETFs. The regulators have reportedly assessed applications from two prominent asset management companies, ARK Invest and VanEck, for spot ETFs.

As stated on the SEC’s official website, there is a 45-day period during which the public can provide comments on both applications. Individuals can share their opinions on whether the SEC should grant or deny approval for these ETFs, as well as outline the potential advantages and risks associated with these financial products.

The ARK 21Shares Ethereum ETF is a collaborative effort between ARK Invest, a sizable investment firm with assets totaling $60 billion, and 21Shares, a digital asset management company that offers cryptocurrency ETPs in Europe. This ETF’s objective is to correlate the price of Ethereum by using the CME CF Ether-Dollar Reference Rate (ETHUSD_RR).

However, the review process does not guarantee approval for the ETFs, nor does it indicate an increased likelihood of approval. Even Ethereum futures ETFs have not received SEC approval yet, with expectations for potential approval set for October.