Ethereum ETF's First Anniversary: From Cold Shoulder to Boom, the Shift in Institutional Confidence Behind Capital Flows

Original author: Prathik Desai

Original compilation: Saoirse, Foresight News

Three months ago (Ethereum ETFs were not optimistic due to significant outflows, low market attention, and insufficient yield advantages), even for the most ardent supporters of Ethereum, celebrating the first anniversary of Ethereum's exchange-traded funds (ETFs) in the U.S. seemed like a fantasy.

However, Ethereum ETFs are now having their moment in the spotlight — it has been a full year since they first started trading on July 23, 2024.

In June 2025, Ethereum ETFs recorded their best monthly performance ever, with inflows exceeding $3.5 billion, 70% higher than the previous peak of $2.08 billion in December 2024. The inflow momentum in July was even stronger, surpassing $3 billion so far, and is expected to exceed June's figures. The past two weeks up to July 18 were the best two weeks for net inflows; and there have been no net outflows for ten consecutive weeks, a first in their 52-week existence.

The 'hockey stick' growth curve in the chart below vividly illustrates this trend.

But the development of Ethereum ETFs has not been smooth sailing.

In May 2024, U.S. regulators approved Ethereum ETFs, which officially started trading on July 23 of the same year, with mixed market reactions. After all, Bitcoin ETFs had already stolen all the spotlight at the beginning of the year, making the debut of Ethereum ETFs seem uneventful: price trends were sluggish, attention gradually waned, and there were no large-scale inflows at the initial stage.

In fact, some initial fund flows even showed net outflows.

In the first 39 weeks of trading, Ethereum ETFs only saw net inflows in 15 weeks; compared to the past 14 weeks, where 13 weeks showed net inflows, the shift in the past three months is stark.

As of July 21, 2025, the assets under management (AUM) of all Ethereum ETFs in the U.S. have exceeded $19 billion, doubling from about $9.6 billion two months ago.

Not just ETFs, institutional interest in Ethereum is also heating up through the form of 'Ethereum reserve assets.'

On June 2, 2025, SharpLink Gaming became the first U.S. publicly traded company to announce the inclusion of Ethereum in its strategic reserves. While the crypto community was still focused on companies adding Bitcoin to their balance sheets, Joe Lubin had already brought Ethereum to the 'reserve asset party.'

As a co-founder of Ethereum and founder and CEO of Consensys, Lubin joined SharpLink Gaming's board as chairman, leading the company's $425 million Ethereum strategic reserve.

Since the launch of this reserve asset plan, SharpLink has become the world's largest corporate holder of Ethereum, holding 360,807 ETH, worth over $1.3 billion at current prices. Additionally, the company has raised an extra $413 million and has earned 567 ETH in rewards through staking its Ethereum holdings.

Moreover, in a supplemental prospectus filed with the U.S. SEC, SharpLink requested to increase the sale limit of its common stock from the initially declared $1 billion to $5 billion.

However, a new entrant in Ethereum reserve assets is fiercely competing with it.

Bitcoin mining company BitMine Immersion has also bet on Ethereum, holding over 300,000 ETH, worth more than $1 billion at current prices. Its chairman, Tom Lee, a Wall Street veteran, has bigger ambitions:

'We are steadily advancing towards our goal of acquiring and staking 5% of Ethereum's total supply.' Currently, the total Ethereum held by SharpLink and BitMine exceeds that of the Ethereum Foundation.

Overall, the fund flows of Ethereum reserve asset companies and ETFs reflect the growing institutional confidence in Ethereum as an infrastructure layer investment.

Cathie Wood's ARK Invest recently reduced significant holdings in Coinbase and Roblox, increasing its investment in BitMine Immersion to $182 million. ARK previously had limited exposure to Ethereum and restructured three flagship ETFs, allocating 1.5% of its portfolio to BitMine.

Billionaire Peter Thiel also holds a 9.1% stake in the company.

A new company formed through the merger of existing companies, Ether Machine, will create a publicly traded platform, providing institutional investors with professional-grade access to Ethereum infrastructure and ETH yields.

The company was co-founded by Andrew Keys, former board member and head of Consensys, and David Merin, former Consensys executive and current CEO of Ether Machine. Post-merger, Ether Machine plans to list on Nasdaq, holding over 400,000 ETH, worth more than $1.5 billion.

What has changed in the past few months? The recent leadership changes at the Ethereum Foundation might be one reason.

At the end of April 2025, the Ethereum Foundation underwent leadership adjustments, separating the board from management. The new leadership identified three core priorities: scaling Ethereum's base layer, optimizing Layer 2 Rollup solutions, and improving user experience.

Ethereum's utility value and earning potential also make it an attractive investment.

Currently, no U.S. ETFs offer staking rewards, as the U.S. SEC has not yet approved them. If Ethereum ETFs eventually include staking, ETH could become a 'digital bond' in institutional portfolios.

ETFs supporting staking could offer 3%-5% native yields. Based on the current $19.6 billion Ethereum holdings, even at an average yield of 4%, ETF issuers could earn over $750 million in staking income.

BlackRock is already exploring product structures that include staking, mentioning in its amended 19b-4 filing that staking is a 'potential future feature pending regulatory approval,' and the market is watching closely.

Experts predict that Ethereum ETF's staking feature could be approved in the fourth quarter of this year.

@JSeyff

For many investors, staking could be the key difference between 'light allocation' and 'deep engagement.' Passive income through compliant investment tools may attract pension funds, endowments, and sovereign wealth funds.

Market maker and trading firm Wintermute pointed out in a report released at the launch of Ethereum ETFs last year that the lack of a staking mechanism was a significant drawback, potentially 'diminishing Ethereum's appeal as an ETF vehicle.'

If the macro environment shifts, such as with interest rate cuts, stabilized inflation, or capital seeking higher yields, Ethereum will become a highly competitive option: it combines the scarcity of supply deflation, the yield from staking, and the accessibility through ETFs and custodians.

Ethereum's price has already shown correlation with institutional activity. Further price breakthroughs could spark market optimism, attracting more inflows. In any case, after a long period of silence, Ethereum's evolution will be welcomed by both retail and institutional investors.

In the past two weeks, Ethereum's price has surged over 50%, hitting a new high for 2025; the cumulative increase over the past three months is 150%.

When ETFs issue new shares, they must buy ETH, locking up supply. The reduction in circulating ETH will create upward pressure on prices.

Ethereum reserve asset companies are also expected to hold ETH firmly. Registered Investment Advisors (RIAs), wealth management firms, and publicly traded companies typically do not seek short-term gains and rarely engage in panic selling.

Reserve asset builders are positioning ETH as programmable collateral, an asset that can generate yield, provide security, and remain stable.

Additionally, the macro backdrop is favorable: the recent signing of the GENIUS Act legalizes stablecoins as digital cash. Ethereum, as the dominant network with a 50% market share, will be the biggest beneficiary.

So, what does the future hold?

Once the SEC approves ETF staking, institutional interest is expected to continue heating up. More companies may establish Ethereum reserve assets due to staking features, and asset managers like BlackRock will further increase their Ethereum investment allocations.

For traditional investors, they might now realize: Ethereum already has two powerful circulation channels — ETFs and reserve assets. Both lock up supply and extend Ethereum's influence into the traditional economy.

Those who directly compare Bitcoin and Ethereum's reserve assets and ETFs overlook the core differences:

Bitcoin is seen as a store of value, a 'digital gold' in macro strategies; while Ethereum is endowed with practical uses. Fund issuers and reserve asset builders buy and support ETH for its added value: staking rewards, infrastructure frameworks, and as a programmable layer for financial applications.

Bitcoin is a 'hold' asset, while Ethereum is an 'application' network.