JPMorgan Sees Untapped Upside For Ethereum

While bitcoin captures media attention with its ETFs, Ethereum is advancing more quietly, but delivering superior performance. According to JPMorgan, this progress is no coincidence: record inflows into ETFs, growing appetite from companies, favorable regulatory signals… All concrete levers that reposition Ethereum no longer as a follower, but as a central player in the institutional crypto dynamic.

The Immediate Drivers of the Outperformance

While capital flees bitcoin for Ethereum , JPMorgan analysts led by Nikolaos Panigirtzoglou explain in a note released Wednesday that the recent outperformance of the market’s second largest crypto results from an alignment of cyclical factors.

“Ethereum has outperformed bitcoin in recent weeks, supported by ETF flows, corporate adoption, regulatory clarifications, and structural improvements of ETFs”, writes the bank.

Here are the four key factors identified by JPMorgan :

• The anticipation of staking approval for spot Ethereum ETFs : the market expects the SEC to soon authorize staking in these products. This would allow investors to earn passive returns without needing to hold the 32 ETH required to validate directly on the network.

• Growing adoption by corporate treasuries : about ten publicly traded companies hold ETH on their balance sheets, representing 2.3 % of the circulating supply. Some companies might operate validators, others prefer liquid staking or DeFi strategies.

• Regulatory clarification on liquid staking tokens : internal SEC statements suggest these tokens will not be considered securities, which alleviates some institutional concerns, although this position has no legal value yet.

• Sustained net inflows into Ethereum ETFs : in July, Ethereum ETFs recorded $5.4 billion in inflows, matching bitcoin. While Bitcoin ETFs show net outflows in August, Ethereum’s continue to attract capital.

In summary, these combined elements have created a favorable environment for a bullish momentum of ETH versus BTC. While some factors relate to speculation on future developments (like staking approval), others, such as ETF flows or institutional adoption, are already observable in market data.

A Technical and Financial Architecture in Transformation

Another factor, more structural this time, reinforces Ethereum’s appeal: the possibility for spot ETFs to make in-kind redemptions, that is, redemptions made directly in cryptos rather than dollars.

The SEC has approved this mechanism, which allows institutions to reduce conversion costs, increase ETF liquidity, and limit massive sales during large outflows. According to JPMorgan, this evolution “brings more efficiency and transparency” to the functioning of financial products based on Ethereum as well as bitcoin. However, the impact would be particularly favorable to Ethereum, due to the more agile structure of its ecosystem.

Beyond these technical improvements, Ethereum still has significant room to grow in institutional adoption. JPMorgan points out that ETH positions on company balance sheets remain well below those of BTC, opening a growth space if the current trend continues.

Ethereum’s appeal no longer rests solely on its function as a platform for smart contracts, but also on its ability to offer passive yield through staking. Furthermore, the U.S. regulatory environment plays in its favor: after the adoption in July of the GENIUS Act regulating stablecoins, the market anticipates another major law on the crypto market structure as early as September.

This new momentum gives Ethereum clear prospects for consolidating its position. If regulatory signals translate into concrete decisions and corporate adoption follows the current dynamic as evidenced by BitMine’s acquisitions , ETH could firmly establish itself as an integrated yield asset, attractive to institutional investors.