JPMorgan Chase’s big interpretation: Four factors make Ethereum outperform Bitcoin

Author: BitpushNews  

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

According to the latest research report from JPMorgan, Wall Street analysts attribute this phenomenon to four core factors—ETF structural optimization, increased purchases by corporate treasuries, softened regulatory attitudes, and the potential opening of staking functions in the future. These factors not only explain Ethereum’s recent strength but also suggest it may have greater upside potential ahead.  

### I. Market Background: Dual Drivers from Policy and Capital Flows  

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

However, in August, Bitcoin ETFs saw slight outflows, while Ethereum ETFs continued to record net inflows. This divergence in capital flows directly triggered Ethereum’s outperformance relative to Bitcoin.  

Meanwhile, the market is awaiting the "Crypto Market Structure Bill," which will be voted on 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 position in the capital market has risen rapidly.  

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

JPMorgan analyst Nikolaos Panigirtzoglou and his team clearly stated in their report that Ethereum’s strength stems from the following four core drivers:  

#### 1. Potential Opening of Staking Functions  

Currently, a key feature of the Ethereum ecosystem is its Proof-of-Stake (PoS) staking mechanism. Users need at least 32 ETH to run a validation node independently, but this threshold is relatively high for most institutional investors and retail users.  

If the U.S. Securities and Exchange Commission (SEC) ultimately approves staking for spot Ethereum ETFs, fund managers could directly generate additional returns for holders without requiring investors to operate nodes themselves. This would mean spot ETH ETFs are not just price-tracking tools but would evolve into "passive investment products with yields."  

This is fundamentally different from Bitcoin’s spot ETFs: Bitcoin itself has no native yield mechanism, while Ethereum ETFs may come with "interest" in the future, significantly boosting their market appeal.  

#### 2. Increased Purchases and Adoption by Corporate Treasuries  

JPMorgan notes that approximately 10 listed companies currently include Ethereum on their balance sheets, accounting for about 2.3% of its circulating supply.  

More notably, some companies are not just "buying and holding" but are further participating in the ecosystem:  

- Running validation nodes: Directly earning staking rewards.  

- Adopting liquid staking or DeFi strategies: Deploying ETH into derivative protocols to earn additional returns.  

This means Ethereum is gradually evolving from a "speculative asset" to a "sustainable corporate asset allocation tool"—a trend Bitcoin has not yet fully achieved.  

The involvement of corporate treasuries represents the entry of longer-term, stable capital pools and strengthens the valuation anchor for Ethereum.  

#### 3. Softened Regulatory Attitudes Toward Liquid Staking Tokens  

Previously, the SEC had ongoing concerns about the compliance of liquid staking tokens (LSTs) like Lido and Rocket Pool, with the market fearing these tokens could be classified as securities, limiting large-scale institutional participation.  

However, the latest developments show that the SEC, at the staff level, has issued clarifying comments suggesting it "may not view them as securities." While no formal legislation has been passed, this statement has significantly eased institutional concerns.  

Against this backdrop, institutional capital that had been观望 due to compliance worries may enter Ethereum staking and related derivative markets more quickly and on a larger scale.  

#### 4. Optimization of ETF Redemption Mechanisms: Approval of In-Kind Redemptions  

The SEC recently approved in-kind redemption mechanisms for spot Bitcoin and Ethereum ETFs. This means institutional investors, when redeeming ETF shares, no longer need to go through the cumbersome process of "selling ETFs for cash first" but can directly withdraw equivalent amounts of Bitcoin or Ethereum.  

This mechanism offers three key benefits:  

- Improved efficiency: Saving time and costs.  

- Enhanced liquidity: Direct linkage between ETFs and spot markets.  

- Reduced selling pressure: Avoiding market sell-offs triggered by large-scale redemptions.  

While this benefits both Bitcoin and Ethereum, Ethereum’s relatively lower corporate and institutional ownership means it has greater growth potential and more significant marginal effects.  

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

JPMorgan’s report notes that while Bitcoin remains the "store of value" leader in the crypto market, Ethereum has broader growth prospects:  

- **ETF adoption**: ETH ETF assets are currently smaller than BTC’s, but with the opening of staking functions, they are expected to attract more long-term capital.  

- **Corporate adoption**: Bitcoin is already widely held by companies and institutions, while Ethereum is still in its early stages, leaving huge room for growth.  

- **DeFi and application ecosystem**: Ethereum is not just a digital asset but also hosts decentralized finance (DeFi), NFTs, stablecoins, AI+ on-chain computing, and other applications, giving it richer use cases.  

In other words, Bitcoin is more like "digital gold," while Ethereum is evolving into the "heart of the digital economy."  

### IV. Conclusion  

JPMorgan’s analysis reveals a key logic: Ethereum’s strength is not driven by short-term speculation but by the combined effects of four factors—policy benefits, structural optimization, institutional adoption, and potential yields.  

As ETF mechanisms improve further, corporate treasuries continue to increase holdings, and the SEC potentially confirms favorable policies, Ethereum is poised to narrow or even surpass Bitcoin’s advantages in the future market landscape.  

For investors, this trend is not just a signal of capital flows but may mark a turning point for the entire crypto market from "single-purpose value storage" to a "multi-dimensional application ecosystem."  

In this new chapter of crypto history, Bitcoin may remain "digital gold," but Ethereum is rapidly emerging as the "heart of the digital economy."  

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