DeutschEthereum Overtakes Bitcoin: Ether ETFs in the US recently experienced record inflows, even overshadowing competing Bitcoin ETFs. Why ETH is currently experiencing more institutional interest than market leader BTC.
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Ethereum Overtakes Bitcoin: why Ether ETFs are in Such High Demand
The flippening has not yet happened – however, Ethereum is currently managing to beat Bitcoin considerably in another sector. The net inflows of US Ethereum ETFs are currently overtaking those of Bitcoin ETFs.
This development points to a remarkable trend. Until now, Bitcoin ETFs have been the undisputed frontrunners among all US crypto funds. Ethereum ETFs even lagged significantly behind the crypto market’s initial expectations after they came onto the market in July 2024.
In the meantime, they are able to live up to their potential, as official market data shows. Last week, Ethereum ETFs recorded higher net inflows than Bitcoin ETFs. From July 21 to 25, a net $1.85 billion flowed into Ether funds. Bitcoin funds increased by only $72 million in the same period.
The offering from the world’s largest asset manager, BlackRock, which distributes its own Ethereum ETF under the ticker ETHA, was once again particularly in demand. ETHA recorded net inflows worth more than $1.2 billion in the record week. Around ⅔ of the $1.85 billion therefore flowed into ETHA.
The enormous investments in Ethereum funds demonstrate a general market trend that has become increasingly apparent over the last few weeks and months. There is a huge amount of institutional interest in Ethereum. Institutions in the USA are suddenly in an investment mood and are even neglecting Bitcoin in favor of Ethereum.
Ethereum is Taking Institutional Interest away from Bitcoin: why?
Ethereum is currently taking institutional interest away from Bitcoin. This trend is due to the fundamental differences between the two blockchains. While Bitcoin is based on Proof of Work, Ethereum relies on Proof of Stake.
Through Proof of Stake, investors can participate in securing the network by simply staking their coins. This process generates passive income, which is made up of network fees and newly created Ether.
This currently generates annual income of 2.90 percent – an inviting rate for institutional investors. In the classic financial market, they could also increase their money through interest, but not at the same time benefit from the general growth of the crypto market.
Ethereum therefore combines passive income with the general attractiveness of cryptocurrencies. While the staking rewards are rather low in absolute terms for most retail investors, institutions can generate enormous profits.
Why is the success of Ethereum ETFs only happening later? In order to benefit from staking, investors currently have to invest native ETH. Ethereum ETFs do not allow staking for regulatory reasons – at least not yet.
Due to their stock exchange listing and the resulting regulatory security processes, institutions prefer a crypto investment via ETFs. Experts expect the ETF staking to be approved by the US Securities and Exchange Commission (SEC) as early as 2025. Institutions are now apparently preparing for this event.
