📣 Why Ethereum outperformed Bitcoin in 2025 - JPMorgan
posted 23 Aug 2025
JPMorgan has identified four key factors behind Ethereum's stronger performance compared to Bitcoin in 2025. The investment bank's analysis comes after Ethereum exchange-traded funds attracted $5.4 billion in July while Bitcoin funds experienced outflows in August.
Ether rose 49% in July while Bitcoin gained 8%. The crypto market's total value reached $3.7 trillion during this period. Ethereum ETFs pulled in $5.4 billion in July, nearly matching Bitcoin ETF inflows. However, August showed Bitcoin funds losing money while Ethereum funds continued adding assets.
Bitcoin ETFs recorded net outflows this month, and Bitcoin's price dropped below $113,000. Ethereum maintained prices above $4,300 and captured 67% of perpetual swap trading volume.
ETF Staking Capability
JPMorgan analysts expect the Securities and Exchange Commission to approve staking for spot Ethereum ETFs soon. This would allow ETF holders to earn yield on their Ethereum holdings, something Bitcoin ETFs cannot offer. The bank considers this the most important advantage for Ethereum.
Corporate Treasury Holdings
About ten publicly traded companies now hold Ethereum in their treasuries, representing 2.3% of total Ethereum supply. These companies often run validators or use decentralized finance strategies rather than simply storing coins. While this amount remains smaller than Bitcoin's corporate holdings, it is growing rapidly. JPMorgan projects Ethereum corporate holdings could reach 8% of supply within three years, matching Bitcoin's current corporate ownership level.
Regulatory Environment
SEC staff indicated that liquid staking tokens likely do not qualify as securities. This removes a major compliance concern for institutional investors. The clearer regulatory stance makes it easier for large investors to add Ethereum to their portfolios.
In-Kind Redemptions
On July 29, the SEC allowed crypto ETFs to exchange shares directly for underlying coins instead of cash. This reduces costs and eliminates forced selling. Since Ethereum has lower institutional ownership than Bitcoin, this efficiency improvement has more room to boost fund flows.
Congress passed the GENIUS Act stablecoin legislation, which strengthens Ethereum's role as a settlement network for dollar-backed tokens. Most stablecoins operate on the Ethereum blockchain, and this legislation directs more funds toward the network.
Market Structure Changes
In-kind redemptions reduce trading costs and improve liquidity during market stress. While Bitcoin gains the same benefit, Bitcoin already has thick
trading volumes, so the relative impact favors Ethereum more.
Ethereum's share of perpetual swap volume hit a record 67%, showing increased trading interest. Leverage in Ethereum perpetual contracts sits near all-time highs at about $25 billion.
Ethereum's share of perpetual swap volume hit a record 67%, showing increased trading interest. Leverage in Ethereum perpetual contracts sits near all-time highs at about $25 billion.
Several factors could reverse Ethereum's gains. The SEC might deny staking approval for ETFs. A security breach in a major liquid staking protocol could damage confidence. A sharp reversal in the Ethereum-Bitcoin price relationship could unwind recent trends.
High leverage levels in Ethereum derivatives create risk of forced selling if prices drop. A break below $4,000 could trigger significant position liquidations.
The regulatory environment could change. While current policies favor Ethereum, political shifts could freeze supportive legislation. The 2026 midterm elections add uncertainty to policy continuity.
Current Status
July's strong inflows for Ethereum slowed after three weeks. Inflows dropped by half and funding rates decreased. Bitcoin's price weakness below $113,000 suggests investor fatigue with the leading cryptocurrency.JPMorgan views the recent slowdown in Ethereum momentum as normal market consolidation rather than a trend reversal. The bank sees ETF staking approval as the next major catalyst that could drive another wave of inflows.
