As the prospect of an ether (ETH) exchange-traded fund (ETF) in the U.S. draws nearer, the quantum of staked ether is approaching unprecedented levels, thereby constraining its circulating volume despite the overall increase in total ETH supply.

“The cumulative quantity of staked ETH has persistently ascended, now hovering near its zenith at 33.3 million ETH or 27.7% of the aggregate supply,” noted Julio Moreno, CryptoQuant’s head of research, in a communique shared with CoinDesk.

The augmenting supply of the second-largest cryptocurrency signals a reversion to an inflationary asset, potentially diminishing its efficacy as a long-term value reservoir. Mitigation strategies include staking, which immobilizes ether for a specified duration, and burning—a process that permanently expunges a fraction of transaction fees from circulation.

“ETH supply is incrementally rising, albeit sluggishly. However, the narrative of ultra-sound money has dissipated. The total supply is at its apex since December 11, 2023,” Moreno observed.

Moreno further elaborated that spot trading volume data indicates ether’s liquidity is comparable to bitcoin’s (BTC), with ETH spot trading volume ranging between 80% to 90% of bitcoin’s in recent weeks.

CoinMetrics data reveals that approximately 12% of ether’s supply is deployed in smart contracts or cross-chain bridges. Coupled with staked tokens, nearly 40% of the cryptocurrency is “locked” and thus not actively traded.

The competition to inaugurate an ether ETF is intensifying, with Polymarket bettors predicting trading commencement by July 26.

Recently, Invesco and Galaxy disclosed a management fee of 0.25% for their proposed spot ether ETFs, marginally surpassing VanEck’s 0.20% fee. However, trading can only commence post SEC feedback on current applications, necessitating issuers to submit final amended forms detailing fees and other requisite information.

Meanwhile, Kalshi bettors assign a 65% probability that ether will outperform bitcoin but are 95% certain ether won’t surpass its all-time high before its larger counterpart.