ETH staking could gain short-term preference over bonds despite record yields

Ethereum (ETH), the second-largest crypto by market cap, has been in focus as an investment avenue through staking. As the global staking market cap approaches $96.72 billion, we assess if Ethereum staking demand falls short against traditional financial instruments.

Also read: Ethereum Restaking - The next big thing after liquid staking?

Ethereum staking experienced a surge 

The Ethereum staking market has experienced a notable surge, according to data from StakingRewards. In the past 24 hours, the number of staked ETH increased by 32.8%. There was a decrease in 24-hour trading volume by 7.8% while Ethereum's price remained muted close to $1,640. The staking ETH market capitalization also rose to $44.63 billion in the last seven days, recording a surge of 3.6%. 

The staking ratio currently stands at 22%, indicating a growing number of Ethereum holders participating in staking. With 839,720 staking wallets and annualized fee revenue of $1.13 billion, Ethereum staking has grown. 

The reward rate for Ethereum stakes over the past seven days is 3.8%, with rewards amounting to $1.68 billion per year. The real reward rate after taking inflation into account is 3.4%. As per the platform, ETH staking has maintained a high reward stability of 100%.

Longer-term T-Bills beat 16-year yield record

Ethereum staking is a strong investment avenue when it comes to rewards. But its traditional counterparts, like Treasury bills, are topping reward returns. Currently, Ethereum staking offers a reward rate of 3.76%. In contrast, the 10-year Treasury bill yield hiked to 4.81% on Tuesday. According to Yahoo Finance, the 10-year has reached its highest levels since 2007. 

Meanwhile, the 30-year Treasury yield now stands at 4.937%. On the back of low inflation and positive economic data, the T-bill yield is at a 16-year peak.

Additionally, Treasury bills carry low risks, making them suitable for conservative investors. However, Ethereum staking carries inherent risks linked to price volatility. In the last few weeks, a surge in Ethereum price has positively impacted the amount of ETH staked. But deciding between Ethereum staking and traditional investments also depends on personal investment goals and the time frame.

Therefore, in the short run and despite cooling inflation levels, some analysts think a recession is likely in the US. In Q4, Bloomberg predicts a GDP growth reduction of at least 1%. These factors could make staking ETH a preferred avenue, at least in the near term.