Ether resurgence is making headlines again as demand for spot ETFs and heightened on-chain activity contribute to a notable recovery in the crypto market. Ether (ETH), the second-largest cryptocurrency by market cap, has seen a robust rebound after dropping more than 55% earlier this year, according to a recent research note from Wall Street giant Citi.

Spot ETFs Drive Institutional Demand

Citi emphasized that Ether has outperformed many of its peers amid market turbulence triggered by macroeconomic concerns, including tariff-related selloffs. Year-to-date, ETH is up nearly 30%, edging closer to Bitcoin’s dominance levels. Notably, Ether is gaining market share rather than giving it up, marking a shift in momentum last seen in late 2024.

The growing popularity of spot Ether exchange-traded funds (ETFs) is a key factor behind this surge. Since April, cumulative net inflows to Ether ETFs have skyrocketed from $2.6 billion to more than $13 billion. Analysts Alex Saunders and Nathaniel Rupert explained that the size of ETF holdings is beginning to exert a stronger influence on ETH’s market behavior, especially on pricing mechanisms.

Crypto Treasury Firms Add Fuel to the Momentum

Supporting this influx are ether treasury firms, which started purchasing sizable volumes of ETH since May. Combined, their holdings now approach $10 billion in market value. The rally in Ether’s price has also been mirrored in the rising equity valuations of these crypto-focused firms, suggesting broader investor confidence in ETH’s future.

Chart illustrating the surge in spot Ether ETF inflows and shift in market share dynamics.

On-Chain Signals and Supply Activity

Alongside ETF activity, on-chain movements are signaling positive sentiment among larger market players. Blockchain data indicates that high-volume wallets continue to accumulate ETH, while retail and smaller investors are trimming their positions. Moreover, the amount of Ether stored on centralized exchanges is steadily declining. This trend highlights a return of supply to on-chain wallets, which often correlates with long-term holding strategies.

This supply reduction on exchanges may also be fueling a “squeeze” effect, where declining availability boosts buying pressure amid rising demand. Citi analysts believe that this dynamic may have amplified the latest bullish move.

Macro Environment Adds to Bullish Case

While some may attribute the rally to technical catalysts, Citi suggests the resurgence is based on more solid footing. The uptick in on-chain engagement points to real growth beyond speculative trading. Combined with a “goldilocks” macroeconomic scenario—conditions that are neither overheated nor recessionary—investors now have more reasons to view Ether positively.

Regulatory shifts and favorable narratives around Ethereum’s use cases—such as decentralized finance (DeFi), non-fungible tokens (NFTs), and layer 2 scaling—are adding to the appeal. With a strong momentum in institutional flows and reduced sell pressure from retail hands, ETH could be poised for a sustainable upward trend.

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