Ethereum is currently making a strong comeback among investors, to the point of outperforming Bitcoin in recent weeks. How can this notable resurgence of interest be explained?
Ethereum outperforms Bitcoin in recent weeks
Despite its recent retracement, Ether (ETH) has seen a strong upward surge in recent weeks. It has soared by almost 200% since its last local low in April below $1,500, clearly leaving Bitcoin behind with its 50% increase over the same period.
This is an opportunity for Ethereum to significantly outperform Bitcoin. A situation that would have seemed unlikely a few months ago, given ETH’s lack of momentum, but clearly the trend has changed for this perennial runner-up in the cryptocurrency sector.
This is why analysts are questioning this notable change in dynamics, which has been greatly accelerated by the adoption of the GENIUS Act regulatory framework on stablecoins in the United States. What is the connection? The strong presence of the Ethereum blockchain as a support for this digital stability market.
However, JP Morgan analysts do not consider this to be a major factor in explaining the current situation. In fact, they have just given four reasons to explain Ethereum’s success, in light of an unprecedented record of $5.4 billion in inflows recorded on its spot ETF market in July, equivalent to those of Bitcoin spot ETFs.
Four reasons for the strong comeback of Ether (ETH)
For JP Morgan analysts, the current resurgence of interest in Ethereum is largely due to decisions—made or hoped for—by the US Securities and Exchange Commission (SEC). The first of these concerns, in particular, the hope that ETH staking, and its associated rewards, will soon become an added value to the spot ETF market.
The second point made by this analyst concerns the significant increase in the number of companies that have decided to hold Ether in their treasuries. There are currently 10 such companies, with a total accumulation of ETH that already represents 2.3% of its available supply. This strategy is also boosted by staking rewards and other returns from decentralized finance (DeFi).
In third place comes the SEC’s recent position on liquid staking. The regulatory body considers that this activity—and the tokens associated with it—does not fall within the scope of securities regulations. This is a major clarification that will allow institutional investors to enter the field.
Finally, the last reason cited by JP Morgan analysts concerns the SEC’s recent approval of in-kind redemptions applied to the Ethereum and Bitcoin spot ETF markets. This is a way to bring “greater efficiency, lower costs, and greater market liquidity (…) by mitigating the need for liquidations during large investor withdrawals.”
This is definitely a favorable context for Ethereum, particularly in light of what is presented as a significant development lag compared to recent advances in Bitcoin.
