Ethereum: A standalone monetary asset or Bitcoin's shadow?
Author: AJC
Compiled by Luffy, Foresight News
Original title: Ethereum's Identity Dilemma: Is it Cryptocurrency or Bitcoin's Shadow?
Of all the major cryptocurrency assets, Ethereum has sparked the most intense controversy. Bitcoin's status as a mainstream cryptocurrency has been widely recognized, while Ethereum's position remains undecided. According to some people, Ethereum is the only reliable non-sovereign currency asset other than Bitcoin; others believe that Ethereum is essentially a business. Not only does revenue continue to decline and profit margins are getting tighter, but it also faces fierce competition from many public chains with faster transactions and lower costs.
The controversy seems to have peaked in the first half of this year. In March, the fully diluted valuation of Ripple (XRP) briefly overtook Ethereum (it is worth noting that all of Ethereum's tokens are in circulation, while Ripple's circulation accounts for only about 60% of the total supply).
On March 16, the fully diluted valuation of Ethereum was $227.65 billion, while the corresponding valuation of Ripple reached $239.23 billion. Hardly anyone could have predicted this outcome a year ago. Then, on April 8, 2025, the exchange rate of Ethereum to Bitcoin (ETH/BTC) fell below 0.02, the lowest since February 2020. In other words, Ethereum has exhausted all of its gains relative to Bitcoin in the last round of the bull market. At the time, market sentiment about Ethereum fell to a freezing point for several years.
To make matters worse, falling prices are just the tip of the iceberg. With the rise of rival ecosystems, Ethereum's share of the public chain fee market continues to shrink. In 2024, Solana revived; in 2025, Hyperliquid rose to prominence. The two joined forces to reduce Ethereum's fee market share to 17%, ranking fourth in the public chain — a cliff-style decline compared to the top position a year ago. Although the handling fee is not everything, it is a clear sign of the flow of economic activity. Today, Ethereum is facing the toughest competitive landscape in the history of its development.
However, historical experience shows that major reversals in the cryptocurrency market often begin at the most pessimistic moment of market sentiment. When Ethereum was declared a “failed asset” by the outside world, most of its apparent decline was actually already digested by market prices.
In May 2025, signs that the market was overly bearish on Ethereum began to show. During this period, the exchange rate of Ethereum against Bitcoin and its price in US dollars all experienced a strong rebound. The exchange rate of Ethereum against Bitcoin climbed from a low of 0.017 in April to 0.042 in August, an increase of 139%; the US dollar price of Ethereum also soared from $1,646 to $4793 during the same period, an increase of 191%. This rally peaked on August 24, when the price of Ethereum hit a record high of $4,946. After experiencing this revaluation, the overall trend of Ethereum has clearly returned to an upward channel. The change in the leadership of the Ethereum Foundation and the emergence of a group of treasury companies focused on Ethereum have injected confidence into the market.
Prior to this round of growth, the differences in the situation between Ethereum and Bitcoin were clearly reflected in the two exchange-traded fund (ETF) markets. In July 2024, an Ethereum spot ETF was listed, but capital inflows were very sluggish. In the first six months after listing, its net inflow was only $2.41 billion, in stark contrast to the Bitcoin ETF's record-breaking performance.
However, with Ethereum's strong recovery, market concerns about the inflow of ETF funds have evaporated. Looking at the full year, the net inflow of Ethereum spot ETFs reached $9.72 billion, while Bitcoin ETFs were $21.78 billion. Considering that Bitcoin's market capitalization is close to five times that of Ethereum, the difference in capital inflow between the two ETFs is only 2.2 times, which is far below market expectations. In other words, when adjusted for market capitalization, the market demand for Ethereum ETFs actually exceeds that of Bitcoin. This result completely reversed the “institutional lack of real interest in Ethereum” argument. Not only that, during a specific period of time, the inflow of funds from Ethereum ETFs even directly crushed Bitcoin. Between May 26 and August 25, the net inflow of Ethereum ETFs was $10.2 billion, surpassing the $9.79 billion Bitcoin ETF over the same period. This is also the first time that institutional demand is clearly skewed towards Ethereum.
Judging from the performance of ETF issuers, BlackRock continues to lead the market. By the end of 2025, BlackRock's Ethereum ETF holdings reached 3.7 million, accounting for 60% of the Ethereum spot ETF market. Compared to the 1.1 million holdings at the end of 2024, the increase was as high as 241%, and the annual growth rate far exceeds that of other issuers. Overall, Ethereum spot ETFs held 6.2 million units at the end of 2025, accounting for about 5% of their total token supply.
Behind Ethereum's strong rebound, the most critical driving force was the rise of treasury companies focused on Ethereum. This type of reserve has created an unprecedented stable and continuous demand for Ethereum, providing support for this asset unmatched by narrative hype or speculative funding. If the price trend of Ethereum marks an obvious turning point, then the continued increase in treasury companies' holdings contributed to deep structural changes at this inflection point.
In 2025, the Ethereum Treasury Company increased its holdings of 4.8 million Ethereum, accounting for 4% of its total supply, which had a significant impact on the price of Ethereum. Among them, the most prominent performer was Bitmine (stock code BMNR) led by Tom Lee. This company, which originally specialized in Bitcoin mining, began gradually converting its reserve funds and capital to Ethereum in July 2025. From July to November, Bitmine purchased a total of 3.63 million Ethereum, and maintained a leading position in the Ethereum treasury company market with 75% of its holdings.
Despite Ethereum's strong rebound, the rally eventually cooled down somewhat. As of November 30, the price of Ethereum has retreated from its August high to $2,991, even below its all-time peak of $4878 in the previous bull run. Compared to the April low, Ethereum's situation has improved significantly, but this round of rebound has not completely eliminated the structural concerns that initially caused the market to be bearish. On the contrary, the controversy over Ethereum's positioning is returning to the public eye with a more intense trend.
On the one hand, Ethereum is showing many characteristics similar to Bitcoin; these characteristics are the key to Bitcoin's promotion into a monetary asset. Today, capital inflows to Ethereum ETFs are no longer weak, and Ethereum treasury companies are the source of continued demand. Perhaps most importantly, more and more market participants are beginning to view Ethereum differently from other public chain tokens and include it in the same monetary framework as Bitcoin.
But on the other hand, the core issues that dragged down Ethereum's decline in the first half of this year are still unresolved. Ethereum's core fundamentals have yet to fully recover: its public chain fee market share continues to be squeezed by strong rivals such as Solana and Hyperliquid; trading activity on the Ethereum underlying network is still far below the peak level of the previous bull market; despite a sharp rebound in price, Bitcoin has easily broken through historical highs, and Ethereum is still hovering below historical highs. Even during Ethereum's strongest months, a large number of holders saw this rise as an opportunity to cash out rather than recognition of its long-term value.
The core issue of this dispute is not whether Ethereum has value, but rather how the asset ETH can actually accumulate value from the development of the Ethereum network.
In the last round of the bull market, the market generally believed that the value of ETH would directly benefit from the success of the Ethereum network. This is the core logic of the “ultrasonic currency theory”: the utility of the Ethereum network will generate a large number of token destruction requirements, thereby building clear and institutionalized value support for Ethereum assets.
Today, we're almost certain that this logic will no longer hold true. Ethereum's fee revenue has plummeted, and there is no hope for recovery; at the same time, the two core areas driving the growth of the Ethereum network — real world assets (RWAs) and the institutional market — all use the US dollar as the core settlement currency rather than Ethereum.
The future value of Ethereum will depend on how it benefits indirectly from the development of the Ethereum network. However, there is great uncertainty about this indirect accumulation of value. Its premise is that as the systemic importance of the Ethereum network continues to increase, more and more users and capital are willing to view Ethereum as a cryptocurrency and a store of value.
Unlike direct, mechanized value accumulation, there is no certainty about this indirect path. It depends entirely on the market's social preferences and collective consensus. Of course, this is not a flaw in itself; however, it means that the increase in value of Ethereum will no longer be necessarily causally related to the economic activity of the Ethereum network.
All of this brings the Ethereum controversy back to the core point of contradiction: Ethereum may indeed be gradually accumulating currency premiums, but this premium has always lagged behind Bitcoin. The market once again sees Ethereum as a “leveraged expression” of Bitcoin's currency attributes rather than an independent monetary asset. Throughout 2025, the 90-day rolling correlation coefficient between Ethereum and Bitcoin remained between 0.7 and 0.9, and the rolling beta coefficient soared to a multi-year high, breaking through 1.8 at one point. This means that the price fluctuation of Ethereum far exceeds that of Bitcoin, but it is also always dependent on Bitcoin's trend.
It's a subtle but critical difference. Ethereum's current monetary attributes are based on the fact that Bitcoin's monetary narrative is still recognized by the market. As long as the market believes strongly in Bitcoin's non-sovereign value storage properties, some marginal market participants will be willing to extend this trust to Ethereum. It can be seen from this that if Bitcoin's trend continues to strengthen in 2026, Ethereum will follow the trend and recover more lost ground.
Currently, the Ethereum Treasury is still in the early stages of development, and its capital to increase its Ethereum holdings mainly comes from common stock issuance. However, if the cryptocurrency market usheres in a new round of bull market, such institutions may explore more diversified financing strategies, such as issuing convertible bonds and preferred shares based on Strategy's model of expanding Bitcoin holdings.
For example, Ethereum treasury companies such as BitMine can be funded by issuing low-interest convertible bonds and high-yield preferred shares, and the funds raised can be directly used to increase their Ethereum holdings, and at the same time pledge these Ethereums to obtain sustainable returns. Under reasonable assumptions, pledge income can partially offset bond interest and preferred stock dividend expenses. This model allows reserves to use financial leverage to continue to increase their Ethereum holdings when market conditions improve. Assuming that the Bitcoin market starts an all-out bull market in 2026, this “second growth curve” of the Ethereum Treasury will further strengthen the high beta attributes of Ethereum compared to Bitcoin.
At the end of the day, the market's current pricing of the Ethereum currency premium still presupposes the trend of Bitcoin. Ethereum has yet to become an autonomous currency asset with independent macro-fundamental support; it is only a secondary beneficiary of the Bitcoin currency consensus, and this beneficiary group is gradually expanding. Ethereum's recent strong rebound reflects the willingness of some market participants to view it as a Bitcoin equivalent rather than an ordinary public chain token. But even at a relatively strong stage, the market's confidence in Ethereum is inseparable from the continued strengthening of the Bitcoin narrative.
Simply put, Ethereum's monetization narrative has come out of a broken state, but the dust is far from settled. Under the current market structure, and the high beta nature of Ethereum compared to Bitcoin, as long as Bitcoin's monetary narrative continues to be fulfilled, the price of Ethereum is expected to rise appreciably; and structural demand from Ethereum treasury companies and corporate capital will provide it with a real upward momentum. But at the end of the day, Ethereum's monetization process will still be tied to Bitcoin for the foreseeable future. Unless Ethereum can achieve a low correlation with Bitcoin and a low beta coefficient over a longer period of time, this goal has never been achieved. Otherwise, Ethereum's premium space will always be shrouded in Bitcoin's aura.
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