In recent weeks, a notable trend has emerged in the crypto market: Ethereum (ETH) has significantly outperformed Bitcoin (BTC).

According to a latest research report from JPMorgan, Wall Street analysts attribute this phenomenon to four core factors—optimized ETF structure, increased holdings by corporate treasuries, eased regulatory stance, and the potential unlocking of staking functionality. These factors not only explain Ethereum’s recent strength but also suggest greater upside potential in the future.

I. Market Background: Dual Catalysts of Policy and Capital Flow

In July, the U.S. Congress passed the “GENIUS Act” stablecoin bill, bringing unprecedented institutional benefits to the crypto market. Subsequently, the spot Ethereum ETF attracted a record $5.4 billion in inflows in July alone, nearly matching the inflows of Bitcoin ETFs.

However, entering August, Bitcoin ETFs experienced minor outflows, while Ethereum ETFs continued to see net inflows. This divergence in capital flow became the direct trigger for Ethereum’s outperformance against Bitcoin.

Meanwhile, the market is awaiting the upcoming vote on the “Crypto Market Structure Bill” in September. Investors widely expect this to be another major turning point similar to stablecoin legislation. Under the dual influence of policy and market expectations, Ethereum’s status in the capital market has rapidly risen.

II. Analysis of the Four Factors: Why Is Ethereum Outperforming Bitcoin?

1. Potential Unlocking of Staking Functionality
   Currently, a key feature of the Ethereum ecosystem is its PoS (Proof of Stake) staking mechanism. Users need at least 32 ETH to run their own validator nodes, which is a relatively high threshold for most institutional investors and retail participants.
   If the U.S. SEC ultimately approves staking for spot Ethereum ETFs, fund managers could directly generate additional returns for holders without requiring investors to run nodes themselves. This means spot ETH ETFs would not only be price-tracking tools but would also upgrade into “yield-bearing passive investment products.”
   This is fundamentally different from Bitcoin’s spot ETFs: Bitcoin itself lacks a native yield mechanism, while Ethereum ETFs may eventually offer “interest,” significantly enhancing their market appeal.

2. Increased Holdings and Applications by Corporate Treasuries
   JPMorgan pointed out that about 10 listed companies have already added Ethereum to their balance sheets, accounting for approximately 2.3% of the total circulating supply.
   More notably, some companies are not merely “buying and holding” but are further engaging with the ecosystem:

• Running validator nodes: Directly earning staking rewards.

• Adopting liquid staking or DeFi strategies: Deploying ETH into derivative protocols to generate additional returns.
  This indicates that Ethereum is gradually evolving from a “speculative asset” into a “sustainable corporate asset allocation tool.” This trend is something Bitcoin has not yet fully achieved.
  The involvement of corporate treasuries represents the entry of longer-term, stable capital pools and enhances the market’s valuation anchor for Ethereum.

3. Regulatory Easing on Liquid Staking Tokens
   Previously, the SEC had ongoing compliance disputes regarding liquid staking tokens (LSTs) such as Lido and Rocket Pool. The market was concerned that these tokens might be classified as securities, thereby affecting large-scale institutional participation.
   However, the latest development is that the SEC staff has provided clarifying comments indicating that these tokens “may not be considered securities.” Although formal legislation is still pending, this statement has significantly alleviated institutional concerns.
   Against this backdrop, institutional funds 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 Mechanism: In-Kind Redemption Approved
   The SEC recently approved in-kind redemption mechanisms for spot Bitcoin and Ethereum ETFs. This means that when institutional investors redeem ETF shares, they no longer need to go through the cumbersome process of “selling ETFs for cash” but can directly withdraw equivalent amounts of Bitcoin or Ethereum.
   This mechanism offers three major benefits:

• Improved efficiency: Saving time and costs.

• Enhanced liquidity: Direct linkage between ETFs and the spot market.

• Reduced selling pressure: Avoiding market sell-offs triggered by large-scale redemptions.
  While this policy benefits both Bitcoin and Ethereum, Ethereum’s lower adoption rate among corporations and institutions implies greater future growth potential and more significant marginal effects.

III. Future Outlook: Has Ethereum’s Potential Surpassed Bitcoin’s?

JPMorgan noted in its report that while Bitcoin remains the leading “store of value” in the crypto market, Ethereum has broader growth prospects:

• ETF adoption: ETH ETF assets under management are still lower than BTC’s, but with the potential unlocking of staking functionality, more long-term capital is expected to flow in.

• Corporate adoption: Bitcoin is already widely held by enterprises and institutions, while Ethereum is still in its early stages, leaving ample room for growth.

• DeFi and application ecosystem: Ethereum is not only a digital asset but also hosts applications such as decentralized finance (DeFi), NFTs, stablecoins, and AI+ on-chain computing, giving it richer use cases.
  In other words, Bitcoin is more like “digital gold,” while Ethereum is evolving into “the infrastructure of the digital economy.”

IV. 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 four factors—policy tailwinds, structural optimization, institutional adoption, and potential yields.

With further improvements in ETF mechanisms, continued accumulation by corporate treasuries, and potential future policy confirmations by the SEC, Ethereum is expected to gradually narrow or even surpass Bitcoin’s advantages in the future market landscape.

For investors, this trend is not only a signal of capital flow but may also represent a tipping point for the entire crypto market transitioning from a “single store of value” to a “multi-dimensional application ecosystem.”

In the new chapter of crypto history, Bitcoin may remain “digital gold,” but Ethereum is rapidly growing into the “heart of the digital economy.”