Why Wall Street is suddenly choosing Ethereum over Bitcoin

For the first time since spot crypto ETFs launched in the US, Ethereum is clearly outpacing Bitcoin in attracting fresh Wall Street capital. But this isn’t just a simple rotation into a higher-volatility coin. Institutions are starting to treat Bitcoin and Ethereum as two very different assets with two very different jobs.

Ethereum ETFs are pulling ahead of Bitcoin

In July, US spot Ethereum ETFs brought in around $365 million in net inflows. Over the same month, US spot Bitcoin ETFs managed only about $172 million, following record outflows of $2.4 billion in May and $4.5 billion in June.

That doesn’t mean Bitcoin is dead money. It does mean the marginal dollar from Wall Street is increasingly choosing ETH instead of BTC, and the reason has a lot to do with how Ethereum works under the hood.

Two treasury models: Bitcoin vs Ethereum

For years, the dominant corporate crypto playbook was simple: raise capital, buy Bitcoin, never sell, and let digital scarcity do the work. The problem with that model is that the asset doesn’t produce cash flow. If a company wants to grow its BTC stack, it has to raise more money through equity, debt, or preferred stock.

Ethereum changes that equation. ETH can be staked to earn yield directly from the network. That turns it into a productive asset and allows a corporate balance sheet to grow its crypto position without constant external financing.

Bitmine: a case study in the new ETH treasury playbook

Bitmine is currently the leading public Ethereum treasury. It holds just under 5.8 million ETH, roughly 4.8% of the entire supply. Over 5 million of those coins—more than 87% of its holdings—are actively staked.

At a recent 7‑day staking yield of about 2.67%, Bitmine’s position generates roughly 134,800 ETH per year in rewards. Depending on the ETH price, that’s in the ballpark of $250–$290 million in annualized cash flow, without the company needing to raise a single extra dollar.

In July, while major Bitcoin treasuries were focused on shoring up cash and managing their capital structure, Bitmine was quietly compounding. It added nearly 10,000 ETH one week, over 10,000 the next, and even repurchased more than $16 million of its own shares under a multi‑billion dollar buyback program.

The key difference: Bitcoin treasuries need financing to grow. Ethereum treasuries can grow themselves via staking yield.

More companies are quietly stacking ETH

Bitmine isn’t alone. Around 67 companies now hold more than 8.2 million ETH between them, roughly 6.8% of the total supply. Corporate treasuries have overtaken ETFs as the main engine of ETH accumulation.

SharpLink Gaming, the second‑largest public ETH treasury, holds about 888,500 ETH and has already earned over 24,000 ETH in staking rewards. Its average cost basis is around $3,500 per ETH, which shows that yield alone doesn’t protect you from price risk—but it does change what the asset is used for. ETH is becoming a yield‑bearing strategic asset, not just a speculative bet.

Wall Street builds staking into its own plumbing

While retail traders watch price charts, Wall Street has been busy wiring Ethereum into its core infrastructure.

On 4 August, BNY Mellon—custodian to roughly $62.6 trillion in assets—integrated native Ethereum staking rewards into its digital asset custody platform, in partnership with Galaxy. Institutional clients can now earn staking yield while keeping their ETH fully custodied at a major global bank.

BNY frames this as offering the governance, controls, and resiliency traditional clients expect. Galaxy emphasizes that future markets will be built on open, programmable rails. Both are effectively saying the same thing: Ethereum is infrastructure, and staking yield is part of its appeal.

BlackRock’s staked ETH products tell the same story

BlackRock, the world’s largest asset manager, is leaning into this view of Ethereum as a productive asset. Its ETHB product, launched in March, stakes up to 95% of its ETH through providers like Figment, Galaxy, and Attestant, and passes about 82% of gross staking rewards through to holders monthly.

The flows highlight the difference. On 31 July, US Bitcoin ETFs saw $265 million in outflows in a single session. ETHB, meanwhile, took in $15.4 million that same day. One product was bleeding, while its yield‑bearing cousin was attracting fresh capital.

BlackRock is also optimizing ETH exposure for large, professional traders. On 4 August, it announced a 1‑for‑3 reverse split on its ETHA fund, effective 6 October, taking the share price from around $14 to about $42. Bloomberg’s Eric Balchunas estimates this could cut trading costs from about 7 basis points to roughly 2. That kind of fine‑tuning matters to institutional desks moving big blocks, not casual retail traders.

If you want a deeper dive into why BlackRock and other giants are moving this way, it’s worth checking out our explainer on why BlackRock and Wall Street are suddenly betting big on Ethereum.

Ethereum is becoming the default chain for tokenized treasuries

Another major driver behind the ETH bid is tokenization. Tokenized US Treasuries now total around $15.2 billion, and Ethereum settles about 43% of that market—more than any other chain. BNB Chain handles roughly 31%, and Stellar about 7.5%.

On 3 August, BlackRock launched BSTBL, a tokenized treasury fund share class of around $6.1 billion on Ethereum, alongside a multi‑chain stablecoin reserve vehicle. BNY Mellon acted as transfer agent and tokenization provider on the launch.

This is a clear signal: Ethereum isn’t just being bought as “crypto exposure.” It’s being accumulated as core infrastructure for tokenized assets, stablecoins, and on‑chain capital markets. For a broader view of how and why traditional finance is going on‑chain, you may also want to read our guide on why Wall Street is moving onchain and how Canton is different.

How institutions now split Bitcoin and Ethereum

Across 2026, research from firms like Fidelity, ARK, Galaxy, VanEck, Standard Chartered, and JPMorgan has converged on a similar narrative:

• Bitcoin is the reserve asset: a sovereign hedge with a fixed 21 million cap. It’s something you hold as a store of value.
• Ethereum is programmable financial infrastructure: a base layer for fees, tokenized assets, and stablecoin settlement. It’s something you use.

Once you accept that split, recent performance looks different. In July, Ethereum gained about 19% versus Bitcoin’s 8%, an 11‑point gap. Against the Nasdaq 100, ETH outperformed by roughly 2,500 basis points—its biggest monthly outperformance since July 2025. The ETH/BTC ratio also climbed back above 0.03 for the first time in months.

Even within individual institutions, you can see the shift. For example, Intesa Sanpaolo reportedly cut Bitcoin ETF exposure while increasing allocations to staked Ethereum vehicles. In other words, institutions want one asset to store value and another asset to move and deploy that value—and they are now funding both separately.

Bitcoin isn’t losing, but the roles are diverging

None of this means Bitcoin has failed. Spot Bitcoin ETFs are still seeing strong days. On 3 August they took in about $170 million, and another $211 million on 4 August, while Ethereum funds added around $53 million that same day.

Instead of a winner‑takes‑all outcome, we’re seeing a clearer division of labor. Bitcoin is solidifying its role as a digital reserve asset and macro hedge. Ethereum is winning as the chain where institutional finance actually operates—through staking, tokenization, and settlement.

The big risk: EIP‑8361 and the staking yield debate

All of this bullish institutional activity around Ethereum has one big assumption baked in: that staking will keep paying an attractive yield. A new Ethereum improvement proposal, EIP‑8361, could challenge that.

On 4 August, researcher Justin Drake and co‑authors published EIP‑8361, also known as the “tapered issuance burn.” Today, Ethereum pays validators from new ETH issuance, and that issuance continues regardless of how much ETH is staked. The proposal would introduce a saturation point at about 60.25 million staked ETH—roughly half the total supply.

As staking participation approaches that saturation level, the protocol would start burning an increasing share of consensus rewards. At full saturation, net issuance would drop to zero. Priority fees and MEV (maximal extractable value) would remain untouched, and the change would be phased in over about 18 months.

At current participation levels, EIP‑8361 would likely cut the baseline staking yield from around 2.6% to roughly 1.1–1.2%. That’s a meaningful drop for anyone who bought ETH primarily for yield.

Why core devs want to taper staking rewards

From the core developers’ perspective, there’s a real problem to solve. Ethereum’s staking ratio hit an all‑time high of 33.33% on 28 July, with inflows running at about 1.75 million ETH per month. Left unchecked, staking participation could exceed 55% by early 2028.

That creates two issues:

• Centralization risk: too much of the network could end up controlled by a handful of large custodians and liquid staking providers.
• Hidden tax on non‑stakers: if issuance stays high, anyone who doesn’t stake gets diluted over time.

Supporters like Grayscale’s Zach Pandl argue that ETH’s cash flows are already paid via inflation, so tapering issuance is a way to protect the network’s long‑term health and decentralization.

Why institutions and DeFi are pushing back

The backlash from parts of the ecosystem was immediate. Critics argue that the proposal:

• Doesn’t fully solve the centralization problem.
• Risks breaking leveraged staking and borrowing loops that underpin DeFi credit markets.
• Could make ETH less attractive as a yield‑bearing institutional asset.

Some DeFi leaders questioned both the design and the process, including the short comment window ahead of the next upgrade’s inclusion deadline. Others even floated the idea that major liquid staking providers might coordinate to oppose the change.

For now, no formal pull request has been opened for the next fork, so EIP‑8361 may be delayed or revised. But the debate highlights a deeper tension: Ethereum’s governance has to balance the network’s long‑term health against the short‑term preferences of big capital seeking yield.

What to watch next

If you hold ETH—or are considering it as a yield play—there are three key metrics to keep an eye on as this debate unfolds:

• Validator entry queue: currently around 2.5 million ETH with a roughly 43‑day wait, down from 2.9 million in early July. If this keeps shrinking sharply, it could signal cooling enthusiasm for staking.
• Validator exit queue: so far it has remained essentially empty since the proposal was announced. A spike here would be an early sign that large players are pulling back.
• Filings and disclosures: any public response from ETF issuers, custodians, or treasury‑heavy companies like Bitmine would be a major signal of how seriously institutions take the yield risk.

The real bet behind owning ETH

All of this leads to an important point for investors. If you own ETH, you’re not just long a crypto asset—you’re also long its governance process. That process can, in principle, change your staking yield and the economics of the network via a vote and a hard fork.

That’s the trade‑off of a productive asset. You get yield and utility, but you also take on governance risk. Bitcoin holders don’t face the same kind of ongoing monetary policy decisions; BTC’s rules are intentionally harder to change.

Where this leaves Bitcoin and Ethereum

To sum up the current landscape:

• In July, Ethereum ETFs attracted about $365 million while Bitcoin ETFs had their worst month since launch.
• Corporate treasuries have become the main buyers of ETH and are staking most of what they accumulate.
• Major custodians, asset managers, and tokenization platforms are converging on Ethereum as the default on‑chain infrastructure layer.
• Bitcoin remains the leading digital reserve asset and macro hedge, but Ethereum is increasingly the chain where institutional finance actually operates.

Ethereum has clearly earned its place as an institutional asset. The open question is how much staking yield the network is willing to pay to keep that capital committed—and how institutions will react if that yield is dialed down in favor of long‑term decentralization and monetary discipline.

Ultimately, the market will decide whether Ethereum’s role as programmable infrastructure is strong enough to outweigh any reduction in yield, or whether some of that $10+ billion in treasury capital starts looking for the next chain that can offer similar functionality with a higher payout.