Written by: BitpushNews
In recent weeks, the cryptocurrency market has seen a noteworthy trend: Ethereum (ETH) has significantly outperformed Bitcoin (BTC).
According to the latest research report released by JPMorgan, Wall Street analysts attribute this phenomenon to four core factors: ETF structural optimization, increased holdings by corporate finance departments, a softened regulatory attitude, and the potential opening of staking functionality in the future. These factors not only explain Ethereum's recent strength but also indicate that it may have greater upward potential in the future.
1. Market background: Dual promotion of policy and capital flow
In July, the U.S. Congress passed the (GENIUS Act) stablecoin bill, bringing unprecedented institutional benefits to the cryptocurrency market. Subsequently, Ethereum's spot ETF attracted a record $5.4 billion in inflows in July alone, nearly matching Bitcoin ETF's inflow.
However, as August approached, Bitcoin ETFs saw a slight outflow of funds, while Ethereum ETFs continued their trend of net inflow. This divergence in fund flow became a direct catalyst for Ethereum's outperformance against Bitcoin.
At the same time, the market is awaiting the upcoming vote in September on the 'Cryptocurrency Market Structure Bill.' Investors generally expect this to become another major turning point similar to stablecoin legislation. Under the dual influence of policy and market expectations, Ethereum's position in the capital market is rapidly rising.
2. Analysis of the four major factors: Why has Ethereum outperformed Bitcoin?
JPMorgan analyst Nikolaos Panigirtzoglou and his team clearly pointed out in their report that Ethereum's strength comes from the following four core driving factors:
1. The potential opening of staking functionality
Currently, a significant feature of the Ethereum ecosystem is the PoS (Proof of Stake) staking mechanism. Users need at least 32 ETH to run their own validation nodes, but this threshold is relatively high for most institutional investors and retail investors.
If the U.S. SEC ultimately approves a spot Ethereum ETF that allows staking, then fund managers can create additional returns for holders without requiring investors to operate nodes themselves. This means that spot ETH ETFs will not only be a price tracking tool but will upgrade to 'passive investment products with returns.'
This is fundamentally different from Bitcoin's spot ETF: Bitcoin itself does not possess a native income mechanism, whereas Ethereum ETFs may carry 'interest' in the future, which clearly increases their market appeal.
2. Increased holdings and applications by corporate finance departments
JPMorgan pointed out that currently about 10 listed companies have included Ethereum in their balance sheets, accounting for approximately 2.3% of the total circulating supply.
Notably, some companies are not just 'buying and holding' but are further participating in the ecosystem:
Run validation nodes: Directly earn staking rewards.
Adopt liquid staking or DeFi strategies: Invest ETH into derivative protocols to earn additional returns.
This means that Ethereum is gradually evolving from being a 'speculative asset' to a 'sustainable asset allocation tool for enterprises.' This trend is something Bitcoin has yet to fully realize.
The involvement of corporate finance departments represents a longer-term and more stable influx of capital, which also enhances the market's valuation anchor for Ethereum.
3. The regulatory attitude towards liquid staking tokens has softened.
Previously, the SEC's compliance of liquid staking tokens (LSTs) like Lido and Rocket Pool was always in dispute, with the market concerned that these tokens would be deemed securities, thus affecting large-scale institutional participation.
However, the latest situation is that the SEC has provided clarifying opinions at the staff level indicating that it 'may not consider it a security.' Although no formal legislation has been enacted, this statement has greatly alleviated institutional concerns.
In this context, institutions that were previously cautious about compliance may enter Ethereum staking and related derivative markets more quickly and on a larger scale.
4. Optimization of ETF redemption mechanisms: Approval of physical redemption
The SEC recently approved the physical redemption mechanism for spot Bitcoin and Ethereum ETFs. This means that institutional investors no longer have to go through the cumbersome process of 'selling ETF to convert to cash' when redeeming ETF shares, but can directly withdraw an equivalent amount of Bitcoin or Ethereum.
This mechanism brings three major benefits:
Increase efficiency: Save time and costs.
Enhance liquidity: Direct linkage between ETFs and the spot market.
Reduce selling pressure: Avoid triggering market sell-offs during large-scale redemptions.
Compared to Bitcoin and Ethereum, this system is also beneficial, but due to Ethereum's relatively low share of corporate and institutional holdings, it means that there is greater room for future growth and more significant marginal effects.
3. Future outlook: Has Ethereum's potential surpassed that of Bitcoin?
JPMorgan's report indicates that although Bitcoin remains the leader in the cryptocurrency market as a 'store of value,' Ethereum has broader growth potential.
ETF adoption: The current fund size of ETH ETFs is still lower than that of BTC, but with the opening of staking functionality, it is expected to attract more long-term capital.
Corporate adoption: Bitcoin has long been held by numerous companies and institutions, while Ethereum is still in its early stages, indicating significant future growth potential.
DeFi and application ecosystem: Ethereum is not only a digital asset but also supports decentralized finance (DeFi), NFTs, stablecoins, AI+ on-chain computing, and other applications, thus offering a richer array of use cases.
In other words, Bitcoin is more like 'digital gold,' while Ethereum is evolving into 'the infrastructure of the digital economy.'
4. Conclusion
JPMorgan's analysis reveals a key logic: Ethereum's strength is not driven by short-term speculation but is built on the combined effects of policy benefits, structural optimization, institutional adoption, and potential returns.
With the further improvement of the ETF mechanism, the continuous increase of corporate finance departments, and the potential policy confirmation from the SEC in the future, Ethereum is expected to gradually narrow or even surpass Bitcoin's advantage in the future market landscape.
For investors, this trend not only signals the flow of funds but may also mean a turning point for the entire cryptocurrency market from 'single value storage' to 'multi-dimensional application ecosystem.'
In this new chapter of cryptocurrency history, Bitcoin may still be 'digital gold,' but Ethereum is rapidly growing into the 'heart of the digital economy.'
