Ethereum is gaining momentum as investor enthusiasm drives growth in ETF inflows and corporate holdings, allowing it to outpace Bitcoin in market performance over the past month.

Ethereum Sees Record Inflows as ETF Momentum Grows

According to JPMorgan, Ethereum (ETH) has outperformed Bitcoin (BTC) thanks to strong capital inflows into spot-based exchange-traded funds (ETFs) and increasing corporate treasury allocations. These developments come as the U.S. edges closer to enacting crucial crypto policy reforms, including the GENIUS Act and a broader crypto market structure bill expected to be voted on by the end of September.

In July, spot ether ETFs saw an all-time high of $5.4 billion in inflows, nearly catching up to their bitcoin counterparts. While August has seen slight outflows from bitcoin ETFs, Ethereum funds have continued attracting capital, reflecting a shifting investor focus.

Key Drivers Behind Ethereum’s Rising Market Stature

JPMorgan analysts highlighted four core reasons for ETH’s recent surge in strength:

• Investor optimism that the U.S. Securities and Exchange Commission (SEC) may permit staking within spot ether ETFs, transforming them into yield-generating instruments.
• Rising corporate treasury allocations, with approximately 10 publicly listed companies collectively holding ETH that represents 2.3% of its total circulating supply.
• The SEC has indicated that liquid staking tokens may be exempt from classification as securities, easing institutional risk concerns.
• Regulators have approved in-kind redemptions for spot crypto ETFs, a change likely to improve liquidity and reduce operational costs during high-volume withdrawals.

Ethereum ETF inflows in July approached record levels, closely matching Bitcoin ETFs.

Institutional Holdings and Potential Growth Ahead

The Wall Street bank believes Ethereum’s role in institutional portfolios may further expand, pointing out that Bitcoin still dominates in terms of ETF and corporate holdings. However, ETH’s recent gains suggest a narrowing of that gap could happen quickly—especially if public companies and portfolio managers seek staking or Decentralized Finance (DeFi) strategies to earn income on their ETH reserves.

In-kind redemption mechanisms are expected to play a pivotal role here by reducing the risk of price disruptions during sizable redemptions, which had previously hindered institutional participation.

JPMorgan’s analysts concluded that Ethereum’s appeal—enhanced by ongoing policy clarity and DeFi integration—may drive further inflows and solidify its stature as a go-to asset alongside Bitcoin in regulated investment vehicles.

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Read more: Ether Resurgence Gains Steam Backed by Spot ETF Demand and On-Chain Growth: Citi