Ethereum staking returns are predicted to outpace U.S. interest rates in the coming year, a shift that could have a significant impact on Ethereum’s price. Experts from FalconX believe this change will occur due to falling U.S. rates and rising Ethereum transaction fees, narrowing the gap between Ethereum staking returns and traditional risk-free rates.
The “Double-Whammy Effect” on Ethereum Staking
The spread between Ethereum’s Composite Staking Rate and the Federal Funds Rate has been negative since mid-2023. However, by mid-2025, FalconX expects two key factors to turn this spread positive: declining U.S. interest rates and increasing Ethereum staking yields. Currently, Ethereum staking yields hover around 3.2%, but rising transaction fees could boost returns for stakers. Lower U.S. rates would make traditional investments like Treasury bonds less attractive, making Ethereum staking yields more competitive.
A Boost for Institutional Interest
A positive spread could drive more investors toward staking Ethereum, especially if yields remain higher than traditional assets. However, institutional investors will likely prefer accessing these staking opportunities through regulated products, such as Ethereum-based ETFs, rather than staking directly on-chain. This shift could attract more capital to Ethereum, potentially driving up the price as staking becomes a more appealing investment.
Source: Decrypt
