Ethereum Surges as ETFs and Treasuries Drive Demand

Bitcoin (BTC) (BTC +0.88%) hit yet another all-time high (ATH) on Wednesday as institutions continue to accumulate digital gold amidst a favorable macro environment. 

The price of $2.42 trillion market cap cryptocurrency made a fresh high at $124,128, according to data from CoinGecko. Too much leverage in the system, however, sent the prices falling on Thursday. In the past 24 hours, 216,583 traders have been liquidated for a total of $1.04 billion.

At the time of writing, BTC is trading at $117,550, up about 23% YTD and 98% in the past year, while being 5.1% off its ATH.

While the largest cryptocurrency is still going strong, the limelight is currently on the second-largest crypto, Ethereum (ETH) (ETH +0.26%). The risk-on environment has Ether finally soaring dramatically.

Up until now, ETH has been the most disappointing performer of this bull market. While Bitcoin continued to climb higher and higher all this time, ETH only moved in one direction, downwards.

But the tide is finally changing with ETH reaching $4,790 on Thursday and nearing its Nov. 2021 peak of almost $4,880. The crypto asset has rallied nearly 240% since its April low this year, when the price fell to about $1,400, a level last seen in March 2023.

As of writing this, ETH is trading at $4,525, up 32.5% YTD and over 71% in the past year. 

With this strong price action, Ether’s quarterly returns now stand at +85.62% in Q4, which follows +36.48% in Q2, outperforming Bitcoin’s +11.02% and +29.74% respectively, as per Coinglass.

ETHBTC ratio is now also green at 0.03859, after bottoming under 0.018 in April. This is expected to be the beginning of an explosive move that could see the ETHBTC ratio climb past 0.08.

With the price surge, Ethereum has become the world’s 22nd largest asset, worth more than Mastercard (MA -1.97%), Netflix (NFLX +0.59%), Palantir (PLTR +1.11%), Costco (COST +1.36%), and Bank of America (BAC -1.47%). 

Bitcoin, meanwhile, sits at 7th place, below Gold, Nvidia (NVDA -0.18%), Microsoft (MSFT -0.03%), Apple (AAPL +0.32%), Alphabet (GOOG +0.2%), and Amazon (AMZN +0.14%). 

Ethereum co-founder Vitalik Buterin is back to being an “on-chain billionaire” too, with his ETH holdings now worth $1.14 bln. The pseudonymous Bitcoin creator Satoshi Nakamoto, meanwhile, is worth $129.6 bln, making the founder the 12th richest person in the world.

With both the majors, Bitcoin and Ether, having a blast, the total crypto market capitalization has also risen to new highs above $4.2 trillion. 

Trading volume has also exploded to $280 billion, signaling renewed investor appetite. 

With that, the Altcoin Season Index on CoinMarketCap has risen to 40 on a 0 to 100 scale, up from 29 last month. But it still has a long way to go. In early Dec., the figure had climbed to a yearly high of 87 while the low was 12 in April this year, which meant Bitcoin season.

Interestingly, despite the calls for an ‘alt season’, one has yet to materialize. If we look at the history, though, an ‘alt season’ tends to take place once Ether has had its fun and risen to great heights. A pause in top cryptos’ uptrend leads to a capital rotation into large-cap coins and, at last, low caps, which marks the end of the bull market.

It’s to be seen if we will get a repeat this time too, but for now, ETH is in focus. 

The strong price momentum for Ether comes as the risk-on environment sends asset prices higher across the markets. Stocks are also surging to new heights as market participants expect the Federal Reserve to cut interest rates in September. Both the S&P 500 and Nasdaq have set record highs this week, while the Dow is near its peak.

Traders are increasingly betting on a 25 bps cut in the upcoming Fed meeting, which is supported by a weak job market and a relatively tame inflation report.

Crypto-friendly US President Donald Trump has also called on the central bank’s chair, Jerome Powell, to cut rates. He has called Powell a “major loser”, threatened to fire him, and is now talking about a lawsuit against the chair of the Fed, which is supposed to be independent.

But more than macro, Ether price is primarily driven by massive ETF flows and treasury accumulation.

Ethereum ETF Inflows Surpass Bitcoin: Institutional Demand Surges

All eyes have shifted to Ethereum as institutional interest in the asset rises significantly.

A spike in interest from traditional financial (TradFi) institutions and investors is even leading retail investors to leave the allure of meme coins for the utility of altcoins. Google Trends shows a big jump for terms ‘Ethereum‘, ‘How to buy eth ‘, and ‘How to buy ethereum since July, similar to one seen during the last bull market.

Traders and investors are cutting down their exposure to other assets in favor of Ether because it is having a moment similar to what Bitcoin experienced ever since its spot exchange-traded funds were approved in January last year.

Spot Ether ETFs were also greenlit by the US Securities and Exchange Commission (SEC) last year. They officially began trading late in July 2024.

However, these investment vehicles didn’t attract much capital, with Bitcoin ETFs leading the inflows by a long shot. 

This year, though, that began to change, and in recent months, institutions have been eagerly deploying more and more capital in the layer one blockchain that pioneered smart contracts and powers a vast ecosystem of DeFi, dApps, and tokenization.

Seen as a focus on quality and fundamentals, Ether is leading the market narrative right now as the higher-beta L1.

Ever since July began, ETH ETFs have recorded only three days of net outflows, with each of just over $619 million. Meanwhile, on Aug. 11th, Ethereum had its first-ever $1 billion ETF inflow, according to the data from Farside. 

These outsized inflows have been so big and strong that they are outpacing years of ETH issuance.

Spot Ethereum ETFs have captured $2.3 billion so far this month, which is equivalent to 500,000 ETH, higher than 450,000 ETH that’s been issued by the network since the Merge almost three years ago.

Ethereum ETFs are also outperforming Bitcoin ETFs. Ethereum recorded seven consecutive days of inflows, totaling more than $3 billion, while Bitcoin had six consecutive days of inflows, totaling just over $1.1 billion.

So, Ethereum is finally beating Bitcoin, both in institutional capital deployment and price. Its inflows are led by BlackRock‘s (BLK +0.17%) iShares Ethereum Trust ETF (ETHA), which accounts for more than 50% of capital intake.

With that, Spot Ethereum ETF issuers are now holding almost $30 billion in total assets, as per SoSo Value. Bitcoin ETFs, however, are still in the lead by a wide margin, with $158.6 billion in total assets.

Amidst all this buying, Ethereum has received even more good news. The SEC has clarified that liquid staking services are not securities offerings, clearing the way for institutional yield-generating ETH products and presenting yet another bullish catalyst for prices.

Just late last month, the SEC also acknowledged Nasdaq’s proposal to allow staking for BlackRock’s ETHA. If approved, the world’s largest asset manager would be able to participate in Ethereum’s POS consensus while passing the staking rewards to its shareholders.

Moreover, President Trump has signed an executive order to allow for crypto assets to be held in 401(K) retirement plans. This can potentially unlock as much as $8.7 trillion in capital.

Corporate Treasuries Adopt Ethereum as Reserve Asset

Spot Ethereum ETF buyers aren’t the only ones interested in ETH. In fact, it’s the public companies with crypto treasuries that have made their way from Bitcoin to Ether that have sparked the mania for the asset.

Taking a page from Michael Saylor’s book, who has acquired 628,946 BTC worth $73.28 billion over the past five years, companies are now racing to stock up on ETH, with Fundstrat’s Tom Lee in the lead through BitMine, which previously focused on Bitcoin mining.

BitMine Immersion Technologies (BMNR) has been having a particularly huge impact on the ETH price through its massive ETH buys. The company’s ETH acquisition strategy may have only begun late in June, but it has already become the world’s largest corporate Ether holder.

“We have separated ourselves among crypto treasury peers by both the velocity of raising crypto NAV per share and by the high liquidity of our stock.”

– BitMine’s Chairman Lee said in a statement last week.

The $10.69 billion market cap company is engaged in aggressive ETH accumulation. So far, it has gobbled up 1.8 million ETH worth $5.4 billion. The company is close to acquiring 1% of Ether’s total supply.

Peter Thiel and Cathie Wood-backed BitMine isn’t done, though, not by a long shot, as it is already seeking to raise a much bigger amount with the sole purpose of adding even more ETH to its balance sheet. BitMine is planning to raise an eye-popping $20 billion to buy ETH.

Tech billionaire Thiel, who bought a 9.1% stake in BitMine recently, is now also backing another Ethereum treasury company. He has bought a 7.5% stake in biotech company 180 Life Sciences, which has rebranded to “ETHZilla” and ranks 10th with 82.2K ETH worth $387.2 million.

Over a decade ago, Thiel’s Founders Fund also awarded Buterin a fellowship of $100,000 to help with the development of Ethereum.

Yet another prominent publicly traded company that’s also an aggressive buyer of ETH is Consensys-linked SharpLink Gaming (SBET). 

The Nasdaq-listed SharpLink, which is involved in sports betting marketing, first launched its treasury strategy in June under the direction of Joseph Lubin, Ethereum co-founder and ConsenSys CEO, who serves as Chairman and strategic advisor. The company offers its investors leveraged exposure to Ether without direct ownership, plus staking rewards.

So far, it has bought 598.8K ETH worth $2.82 bln. SharpLink has acquired 0.50% of the ETH supply.

Much like BitMine, SharpLink is also raising more funds. The company has announced a $400 million direct offering to buy more ETH.

“The speed and scale of these investments reflect not only investor trust in SharpLink, but also the growing recognition of Ethereum’s transformative potential.”

– SharpLink co-CEO Joseph Chalom

He also added that the firm has already raised almost $900 million in the past week.

Both SharpLink and BitMine are accumulating ETH at a much faster pace than Saylor did BTC, and together, they are currently the top two largest Ethereum treasuries, holding a combined $8.2 billion in ETH, according to data from StrategicETHReserve.

While the buying is great for now, the question is, are these ETH treasuries just the bull market thin, or will they last? Well, the fever of adding ETH to the balance is running high, and once the trend slows down, so will the trend. If we enter a prolonged price downtrend, the accumulation can stop altogether, potentially taking many of these companies down with it. 

However, this isn’t an entirely new strategy; many protocols hold significant ETH treasuries.

For instance, Ethereum Foundation (EF), a non-profit dedicated to supporting Ethereum and related technologies, sits in 4th place with 231.6K ETH worth over $1 bln, and it regularly sells ETH to fund its operations.

Given that ETH is the native gas token of the Ethereum network, used to transact on the blockchain, earn rewards through staking, and is widely adopted across the DeFi sector, companies that rely on Ethereum’s infrastructure and services are naturally incentivized to hold ETH.

So, come bear market, the value of reserves will shrink, forcing the sales of ETH, but some are likely to survive. 

Also, staking ETH can provide a semi-sustainable funding stream. As brokerage Bernstein noted, the ETH treasury model “has the benefit of actual cash flow yield driving operating earnings,” but at the same time, faces liquidity and smart contract security risks.

Ethereum Price Outlook: Demand Meets Supply Crunch

Amidst all this momentum, Ether has been showing remarkable strength, which the market is expecting to continue. This means new highs for the asset, which many expect to be as high as $25K this cycle.

While it’s to be seen just how high ETH would go, supported by institutional and treasury asset adoption, pullbacks are still expected, much like Bitcoin’s journey to new ATHs, especially now that Ether is near its peak.

On the downside, ETH has immediate support at the psychological level of $4,500 and much stronger below that at $3,750. On the upside, the ATH is the immediate resistance, with a stronger one present at the round number $5,000. Crossing the major psychological barrier of 5K will take ETH into price discovery.

According to investment bank Standard Chartered’s Global Head of Digital Assets Research, Geoff Kendrick, ETH can hit $7,500 by year-end, up from their previous $4K target, due to the ETH backdrop improving “dramatically in recent months.”

They are calling an even bigger target for 2028 at $25,000 per ETH. 

The analyst noted that Ether treasury companies, which have stepped in as a source of demand for ETH, have attained 1.9% of its circulating supply since June, while exchange-traded funds have bought 3.8% of the supply during this period. The analysts added:

“Based on publicly announced plans by the treasury companies, we think their ETH buying is likely to continue, and we see potential for Ethereum treasury companies to increase their holdings to 10% of all circulating ETH.”

Currently, they are holding 8.27% of the ETH supply, as per Strategic ETH Reserve.xyz.

But that’s not all, 29% of the ETH supply is also locked up in staking, while large amounts are tied in DeFi protocols.

ETH’s supply, unlike Bitcoin’s, is not fixed, though. Still, it has only increased by 0.13% since the Merge. Also, an average of 683,000 ETH is removed from circulation through burning (EIP-1559) as a result of transaction fees.

This supply crunch means a potential shortage of ETH available for sale on exchanges and OTC, and when that meets the increasing demand, that translates to an upward pressure on prices, which means a fresh ATH for ETH may be around the corner.

According to Lee, Ether will be the “biggest macro trade” over the next decade, and in line with that, expects the price to rally to as high as $15,000 by the end of the year. Fundstrat’s Lee wrote in a post on X on Wednesday:

“ETH is arguably the biggest macro trade for the next 10 to 15 years as AI creates a token economy on the blockchain and as Wall Street financializes on the blockchain.”

This price action will be driven by Wall Street, which he believes will be spurred by the GENIUS Act stablecoin regulations and by the SEC’s ‘Project Crypto,‘ which supports DeFi growth for institutions. He noted that the majority of stablecoins, as well as TradFi projects, are being built on Ethereum.

It is already home to over half of all stablecoins, and Standard Chartered analysts are also of the view that it will only grow. Stablecoins, the analysts wrote, “account for 40% of all blockchain fees today,“ and the growth “would have a significant direct impact on fees.”

The Ethereum network is also showing signs of life with daily transactions surging past 1.87 million on Aug. 5th, according to data from Etherscan. This shows that Ethereum is starting to attract on-chain interest after losing to Solana throughout last year.

The total value locked (TVL) in DeFi is also climbing, currently at $158.3 billion, last seen in early 2022. Ethereum accounts for over 60% of this value.

“The growth of this internet financial economy, driven by the digital dollar and tokenized assets, will drive higher transactions and user growth on the Ethereum ecosystem,“ noted Bernstein adding, “ETH the underlying native asset, backed by transaction fees-driven staking yield (and ETH buyback and burn economics), should accrue value from the growth of the Ethereum financial economy.”

On top of it all, the platform is working on significantly reducing transaction costs to make Ethereum more attractive. Having recently celebrated its 10-year anniversary, Ethereum is preparing to undergo the Fusaka upgrade this year to enhance accessibility, data efficiency, and user experience.

According to co-founder Buterin, Ethereum’s blockchain capabilities should grow tenfold over the next year.

In regard to that, upgrades like Surge, Scourge, Verge, Purge, and Splurge will bring significant improvements to the Ethereum network, fostering its broad mainstream retail and institutional adoption to help it become the core infrastructure for global finance.

Latest Ethereum (ETH) News and Developments

Final Thought

Ethereum is finally in the game as price soars thanks to a coordinated, institutional-level movement driven by ETF inflows, aggressive corporate treasury strategies, and a tightening supply. As all these forces come together, they mirror the path that Bitcoin took to make its historic highs, but with a broader utility layer fueling the narrative. 

If history rhymes, ETH’s ascent to new highs can pave the way for a market-wide altcoin rally!