Ethereum ETFs can now participate in staking without compromising liquidity, thanks to the Pectra upgrade. The upgrade introduces EIP-7251 and EIP-7002, increasing the maximum staking balance and enabling partial withdrawals.
After bulls lost momentum near $2,650, ETH is targeting a return to the $2,300–$2,500 range.
Ethereum (ETH) traded above $2,500 on Thursday as digital asset price provider CF Benchmarks highlighted in a report that the Pectra upgrade allows ETH exchange-traded funds (ETFs) to efficiently earn staking rewards while meeting high liquidity standards.
How Pectra Upgrade Enhances Ethereum ETFs
According to a CF Benchmarks report, Ethereum ETFs no longer need to sacrifice yield to maintain liquidity post-Pectra.
James Flamant, Senior Product Manager at CF Benchmarks, stated: “Pectra transforms Ethereum ETFs from passive investment tools into comprehensive total return products, offering both capital appreciation and staking income without restricting investor access to funds.”
Developers executed Pectra on May 7, introducing nine Ethereum Improvement Proposals (EIPs) to enhance the network.
The report emphasizes that fund managers can now efficiently participate in staking by consolidating their stakes and compounding rewards through EIP-7251.
Key Features of EIP-7251 and EIP-7002
EIP-7251 raises the maximum staking balance from 32 ETH to 2,048 ETH while keeping the minimum threshold at 32 ETH. Before Pectra, fund managers interested in staking had to operate multiple validators in small batches of 32 ETH, unable to compound earnings.
The report notes: “Previously, once a validator accrued rewards beyond 32 ETH, the excess did not contribute to additional rewards unless restaked. EIP-7251 reduces fragmentation and allows automatic compounding of staking rewards, boosting the yield potential for ETFs that reinvest earnings.”
Flamant also highlighted that EIP-7002 enables partial staking withdrawals without fully exiting a validator. This allows fund managers to allocate 75–95% of assets to staking without affecting their ability to meet redemption requests.
He wrote: “This shift effectively converts staked ETH holdings above the minimum requirement into an accessible liquidity reserve for fund operations. Compared to facing weeks or months of exit queue delays during market stress, funds can now access most of their staked holdings through partial withdrawals processed in predictable sweep cycles.”
Since Pectra went live, U.S. spot Ethereum ETFs have recorded seven consecutive weeks of net inflows, totaling $1.7 billion.
While Ethereum ETFs in most other regions include staking as an additional income source for investors, this feature has not yet been approved for U.S. counterparts. The Securities and Exchange Commission (SEC) approved these products in July last year under former Chair Gary Gensler, after issuers removed staking and related terms from their applications.
However, following the presidential election win by Donald Trump and Gary Gensler’s resignation, several issuers—including Fidelity, 21Shares, Bitwise, and Grayscale—have applied to include staking in their spot ETH ETFs.
Under a crypto-friendly SEC leadership chaired by Paul Atkins, post-Pectra improvements in staking liquidity and efficiency may increase the likelihood of approval.
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Ethereum Price Prediction: ETH Bears Halt Rally
According to Coinglass data, Ethereum recorded total futures liquidations of $52.81 million over the past 24 hours. Long and short liquidations amounted to $20.40 million and $32.41 million, respectively.
After a rally of over 7%, bears defended the $2,650 level, pushing ETH briefly below $2,600 and targeting the 50-period and 100-period Simple Moving Averages (SMA).
If ETH breaks below $2,500, the top altcoin may resume consolidation within the $2,300–$2,500 range. The lower boundary of a key symmetrical triangle, reinforced by the 200-period SMA, could provide support if ETH falls below this range.
On the upside, ETH may continue rising to test the upper boundary of the symmetrical triangle. A breakout above the triangle could see ETH challenge the key resistance at $2,850.
The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) remain above their neutral and overbought threshold lines, indicating dominant bullish momentum.
Frequently Asked Questions
What is the Pectra upgrade?
The Pectra upgrade is a recent Ethereum network update that implements several EIPs, including EIP-7251 and EIP-7002, to improve staking efficiency, allow higher validator balances, and enable partial withdrawals.
How does Pectra benefit Ethereum ETFs?
Pectra allows ETFs to stake assets more efficiently by reducing operational fragmentation, enabling automatic reward compounding, and providing better liquidity management through partial withdrawals.
Can U.S. Ethereum ETFs currently offer staking?
No, staking is not yet approved for U.S. spot Ethereum ETFs, but several issuers have submitted applications to include this feature following recent regulatory changes.
What are the key resistance levels for ETH?
ETH faces immediate resistance near $2,650, with major resistance at $2,850. Support levels are found at $2,500 and within the $2,300–$2,500 range.
How do EIP-7251 and EIP-7002 work together?
EIP-7251 increases the maximum staking balance per validator, while EIP-7002 allows partial withdrawals. Together, they help large stakeholders like ETFs optimize yields and maintain liquidity.
What indicates bullish momentum for ETH?
Technical indicators such as the RSI and Stochastic Oscillator staying above neutral levels suggest continued bullish momentum, provided key support levels hold.