On September 9, 2025, the cryptocurrency market was ignited by news from traditional finance: global asset management giant BlackRock submitted a revised S-1 application for its spot Ethereum ETF. This move not only caused ETH to surge by over 4% in the short term, but also made the entire crypto community realize that institutional investment in Ethereum may be faster than expected.

BlackRock ETF Amendment: Signals in the Details

BlackRock's revised filings contain a number of intriguing details. According to information published on the US SEC's official website, the new document specifies three key adjustments: First, Coinbase Custody is designated as the sole custodian, fully consistent with the custody structure of the company's Bitcoin ETF (IBIT). IBIT currently manages over $50 billion, demonstrating the maturity of its custodial system. Second, the ETH price calculation mechanism has been refined, using the average real-time transaction price of six compliant exchanges, including Coinbase and Kraken, as a benchmark, mitigating the impact of price fluctuations on a single platform on the ETF's net asset value. Third, a "liquidity crisis response clause" has been added, allowing the ETF to temporarily suspend trading if ETH drops by more than 20% in a single day. This provision is clearly intended to address the SEC's concerns about "market manipulation risks."


"This is BlackRock's successful path in replicating the Bitcoin ETF." Zhang Ming, a researcher at the crypto analysis agency Nansen, pointed out, "Before the Bitcoin ETF was approved in 2024, they also revised the documents three times to gradually improve the risk control details, and eventually became the first crypto product to raise more than US$1.5 billion in a single day." Data shows that among the 11 Bitcoin ETFs currently listed on the US market, BlackRock IBIT accounts for 62% of the market share, which shows its channel capabilities and institutional appeal.

Why does this news stir the market?

The “breaking circle” effect of institutional trust

BlackRock's entry into the market is breaking down the trust barrier between cryptocurrencies and traditional finance. A recent Goldman Sachs research report predicts that if a spot Ethereum ETF is approved, it will bring at least $40 billion in incremental funding to ETH, equivalent to approximately 5% of ETH's current circulating market capitalization. Crucially, this capital will primarily come from "long-term funds" such as pension funds and university endowments, a stark contrast to the crypto market's previous structure, which was dominated by retail investors.


The market reaction has confirmed this expectation: after the news was announced, the discount rate of Grayscale Ethereum Trust (ETHE) narrowed from -9.3% to -4.1%, indicating that off-market funds are willing to enter the market; at the same time, the volume of ETH buy orders from Coinbase institutional accounts surged 300% within two hours, reaching a six-month high.

A possible breakthrough in the regulatory deadlock

The SEC's definition of Ethereum's nature (commodity or security) has long been a major barrier to institutional entry. However, BlackRock's proactive ETF application has been interpreted as an optimistic outlook on the regulatory environment. In fact, the SEC's 2024 Bitcoin ETF approval signaled that crypto asset ETFs are feasible, provided sufficient transparency is maintained regarding custody and pricing mechanisms.


"Ethereum's 2022 'merger' is a key turning point," said Emin Gün Sirer, director of the Cornell University Blockchain Research Center. "After switching from proof-of-work to proof-of-stake, its decentralization has increased significantly, making it difficult for the SEC to define it as a 'security.'" Currently, the U.S. Commodity Futures Trading Commission (CFTC) has clearly classified ETH as a "commodity," which contrasts with the SEC's ambiguous attitude, but also provides optimistic expectations for the market.

The long-term logic behind ETH: more than just ETFs

In addition to the short-term ETF benefits, Ethereum's own ecological evolution is building multiple supports:

The deflationary narrative continues to strengthen

According to Glassnode data, as of September 9th, Ethereum had destroyed a cumulative 3.62 million ETH since the implementation of EIP-1559, worth over $10 billion at current prices. In the past 30 days alone, with DeFi locked-in assets rebounding to $52 billion and NFT weekly trading volume exceeding $900 million, the average daily ETH destruction rate has reached 13,000, and the annualized inflation rate of circulating supply has dropped to 0.18%, putting it within striking distance of becoming a deflationary asset.

The institutionalization of the staking economy

The total amount of ETH staked has reached 35.2 million, accounting for 29.3% of the total circulating supply. Notably, the market share of institutional staking service providers (such as Figment and Kiln) has increased from 22% at the beginning of the year to 34%, indicating that professional institutions are replacing retail investors as the main staking force. The current annualized staking yield is stable at 3.8%-4.3%. In the global low-interest rate environment, this "risk-free" return is extremely attractive to institutions such as insurance funds and money market funds.

The explosive growth of the Layer2 ecosystem

Ethereum's Layer 2 network is becoming a core engine for ecosystem expansion. Arbitrum's daily active users have surpassed 2 million, surpassing the Ethereum mainnet for the first time. Optimism, through its "Superchain" initiative, has achieved cross-chain interoperability and attracted over 800 DApps. Coinbase's Base, leveraging its advantage in fiat currency access, saw its average daily trading volume exceed $120 million in September. The booming Layer 2 ecosystem has not only reduced user costs (transaction fees are only $0.02-0.1 USD per transaction) but has also increased demand for ETH's underlying tokens through its "stake-and-settlement" mechanism.

Technological upgrade is imminent

The developer community revealed that Ethereum's "Pectra" upgrade, scheduled to launch in the fourth quarter of 2025, aims to improve user experience. First, it introduces the Account Abstraction (AA) mechanism, allowing users to securely use their wallets without having to manage private keys. Second, it optimizes EVM compatibility, increasing cross-chain efficiency between Layer 2 and the mainnet by 10 times. Third, it adds a quantum-resistant signature algorithm, proactively addressing security risks for the next decade. These improvements are seen as a key step in Ethereum's transition from being "developer-friendly" to being "user-friendly."

Risk Warning: Calm Thinking Behind the Carnival

Despite the positive news, the risks in the crypto market have never disappeared:


  • Risk of "Expectation Fulfillment": Historical experience shows that markets often rally before events materialize. For example, on the day the Bitcoin ETF was approved in 2024, BTC surged before plummeting 7%. Currently, ETH prices have already partially reflected expectations for the ETF. If the final approval falls short of expectations, a correction could occur.

  • Regulatory uncertainty: The SEC could still delay or reject applications due to "insufficient decentralization" or "market manipulation risks." In 2023, the SEC rejected seven Ethereum ETF applications from institutions, a precedent not unheard of.

  • Market Volatility: Cryptocurrencies are inherently volatile. As of September, ETH's 30-day volatility reached 68%, eight times that of the S&P 500. Short-term investors chasing highs should be wary of the volatility risks that may arise after sentiment subsides.

Conclusion

The launch of BlackRock's spot Ethereum ETF is undoubtedly a significant step for Ethereum's entry into mainstream financial markets. However, as JPMorgan analysts caution, "The financial dividends generated by ETFs are short-term; Ethereum's long-term value depends on whether its ecosystem can continue to generate real demand." Tonight's market volatility may be just a ripple in this "wave of institutionalization," but the real transformation is just beginning.

If you are still confused in the cryptocurrency world and lack first-hand information and professional guidance, you might as well click on the avatar to follow Mingge. Mingge has been deeply involved in the cryptocurrency world for many years and shares his rich experience and real-life operational insights every day!#ETH