Ethereum’s market cap is currently a quarter of Bitcoin’s. Yet new institutional research shows the altcoin can outpace BTC in total market capitalization soon. Analysts argue that treasury firms and ETFs fuel a demand cycle that could make Ethereum the leading digital asset within the next one to two market cycles.
Trend Research, a research arm of LD Capital, estimates that treasury firms and ETFs already hold nearly $20 billion worth of Ethereum, or 3.39% of the total supply. Unlike Bitcoin’s static supply model, they are not only buying ETH at scale but also using it as a yield-generating asset.
Treasury Firms Push ETH Beyond Supply Dynamics
The balance between staking supply and institutional demand now defines Ethereum’s trajectory.
Since the Pectra upgrade in May 2025, the network has capped daily unstaking at 57,600 ETH. This predictable flow has already been eclipsed by institutional inflows.
BitMine has accumulated more than 1.5 million ETH since July, spending over $5.6 billion. SharpLink has added about 740,000 ETH since June.
Both firms keep expanding their allocation, with BitMine targeting ownership of up to 5% of supply. Trend Research said this buying reshapes market dynamics, similar to MicroStrategy’s role with Bitcoin.
Ethereum Yield and ETF Flows
Ethereum offers structural advantages. Unlike Bitcoin, ETH holdings generate yield through staking and liquidity provision. Staking returns average 1.5 to 2.15% annually.
Liquidity provision in decentralized finance (DeFi) can raise yields to about 5%. This income stream allows treasury firms to justify higher valuations through discounted cash flow models. Trend Research calls this effect a “cash flow premium.”
ETF flows reinforce this trend. From mid-May through mid-August, Ethereum ETFs recorded 14 consecutive weeks of net inflows, adding $19.2 billion.
BlackRock’s ETHA leads with 2.93% of supply. Trend Research noted that Ethereum ETFs still trail the $179 billion scale of Bitcoin ETFs, leaving significant room for growth.
BeInCrypto reported that Fundstrat’s Tom Lee expects Ethereum to hit $5,500 in the near term and potentially climb to $10,000–$12,000 by year-end. He cites treasury accumulation and shrinking exchange balances as reasons for his outlook, which echoes Trend Research’s thesis that institutional demand overwhelms supply.
Trend Research also noted that institutional demand for Ethereum now far exceeds unstaking supply, a factor that could weaken Bitcoin’s relative position.
Why Ethereum Could Surpass Bitcoin
Trend Research lists several structural reasons why Ethereum may surpass Bitcoin in the coming cycles. The first is supply and demand.
Daily unstaking remains capped at 57,600 ETH, while treasury firms and ETFs purchase much more, creating a persistent net demand that Bitcoin cannot match.
Treasuries, ETFs, and Whales
Second, treasury firms and funds are accumulating ETH as a reserve. Unlike Bitcoin, Ethereum generates yield through staking and DeFi liquidity, making it a cash flow asset rather than only a scarce commodity.
Also, ETF flows continue to favor Ethereum. Ethereum ETFs have logged 14 straight weeks of inflows worth $19.2 billion. Bitcoin ETFs, by contrast, saw outflows. BlackRock’s ETHA alone holds nearly 3% of the supply.
Furthermore, on-chain data shows whales rotating from BTC into ETH. Futures trading volume share for Ethereum rose from 35% in May to 68% in August. Some large holders even staked hundreds of thousands of ETH, surpassing the Ethereum Foundation’s balance.
Technicals Signal a Short-Term Test
While the long-term case grows stronger, ETH faces short-term volatility. Matrixport’s Markus Thielen expects ETH to trade between $4,355 and $4,958, warning that momentum has slowed since July’s rally.
“Respecting the technicals could be the difference between making money and losing it,” Thielen said.
Charts show Ethereum recently bounced off its 21-day moving average, a level that attracted dip-buying in early and mid-August. But fading momentum raises the risk of a retest below $4,355.
Market direction may hinge on whether treasury firms and ETFs keep buying aggressively.
BeInCrypto also reported that Ethereum recently posted one of the largest exchange outflows since July, while the taker buy–sell ratio briefly exceeded 1.
Institutions, including BlackRock, rotated nearly $892 million from Bitcoin into ETH, reinforcing the bullish setup.
Futures trading volume share for Ethereum rose from 35% in May to 68% in August, while Bitcoin’s fell sharply. On-chain activity shows whales selling Bitcoin and buying ETH.
In one case, a large holder staked 269,485 ETH, surpassing the Ethereum Foundation’s holdings.
This rotation also shows changing investor psychology. Bitcoin is still seen as “digital gold,” but ETH is gaining recognition as financial infrastructure for stablecoins, tokenized assets, and DeFi.
The recent passage of the US GENIUS Stablecoin Act reflects this shift. With over half of stablecoin and real-world asset activity running on Ethereum, the asset benefits from policy and technological support.
Macroeconomic conditions also support Ethereum’s case. Federal Reserve Chair Jerome Powell signaled at the Jackson Hole symposium that rate cuts are likely in September. Past cycles suggest looser policy has often favored Ethereum’s performance over Bitcoin.
Trend Research estimates Ethereum’s market capitalization could exceed $3 trillion in optimistic scenarios, outpacing Bitcoin’s current valuation.
The post Research Predicts Ethereum To Overtake Bitcoin Within 1–2 Cycles appeared first on BeInCrypto.
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