Ethereum’s recent price rally is being fueled by a significant structural shift in demand, according to a recent investor note from Bitwise Chief Investment Officer Matt Hougan.
Since May 15, a surge in buying activity from exchange-traded funds (ETFs) and corporations has resulted in the acquisition of nearly 2.83 million ETH, valued at over $10 billion.
This purchasing activity has outpaced new ETH issuance by a factor of 32, contributing to a supply-demand imbalance that analysts say could persist. Hougan explained that Ethereum’s price has climbed more than 65% in the past month and 160% since April.
While market sentiment plays a role in crypto asset movements, the Bitwise executive attributes this surge primarily to fundamentals, particularly the gap between how much ETH is being bought and how much is being created on-chain. In his view, the current dynamic mirrors what occurred with Bitcoin after the launch of spot BTC ETFs in early 2024.
ETFs and Corporations Drive ETH Accumulation
The trend reversal for Ethereum became evident in mid-May, when inflows into spot Ethereum ETFs gained momentum. According to Hougan, these investment vehicles have pulled in over $5 billion since then. Meanwhile, corporate entities have begun positioning ETH as a strategic asset within their treasuries.
Companies like Bitmine Immersion Technologies (BMNR), SharpLink Gaming (SBET), Bit Digital (BTBT), and The Ether Machine (DYNX) have all announced large ETH holdings or purchasing plans, with Bitmine alone targeting 5% of total ETH supply.
SharpLink Gaming, for instance, has acquired more than 280,000 ETH, while Bitmine has amassed over 300,000 ETH. Bit Digital sold its Bitcoin reserves to acquire more than 100,000 ETH, signaling a shift in institutional preferences toward Ethereum.
These companies are not only making sizable acquisitions but also publicly outlining long-term ETH strategies, indicating a structural commitment to the asset.
Outlook Suggests Continued Demand Momentum
The upward trajectory in demand appears likely to continue. Hougan notes that although ETH’s market capitalization is about 20% of Bitcoin’s, ETH ETFs still account for less than 12% of the assets under management held in Bitcoin ETFs.
Bitwise expects that gap to narrow as stablecoin growth and tokenization trends, both primarily supported by Ethereum, attract further capital inflows.
Additionally, Hougan highlights the growing appeal of ETH treasury companies, whose stock valuations are currently trading at premiums to the value of their underlying ETH holdings. This market condition incentivizes further ETH accumulation by public firms, especially if the premiums remain.
He projects that these entities could collectively purchase another $20 billion in ETH over the next year, which, given Ethereum’s estimated supply issuance of 800,000 ETH in that time, could represent nearly seven times more demand than new supply.
Though Ethereum does not share Bitcoin’s hard cap, Hougan emphasizes that short-term price action is largely dictated by supply and demand mechanics. Given the current imbalance, he believes the upward price movement could continue.
Whether or not this trend sustains over the long term, Ethereum’s near-term price action seems increasingly influenced by institutional behavior and treasury adoption strategies.
Featured image created with DALL-E, Chart from TradingView
