Institutional investors shift their focus from Bitcoin to Ethereum

As the Bitcoin market matures, institutional investors are turning their attention to Ethereum in search of new growth opportunities. Compared to simple asset appreciation, Ethereum offers institutions a unique way to participate, enabling them to not only gain stable on-chain yields but also to deeply engage in ecological construction through staking, promoting the entire staking sector towards a more standardized and large-scale direction.

From Asset Reserves to Staking Participants

Bitcoin prices have reached new highs, and the driving force behind this has shifted from retail investors to the collective efforts of institutional investors. The approval of spot ETFs provides a compliant entry point for traditional financial institutions. Some listed companies have realized significant book value appreciation after listing Bitcoin as a financial reserve asset, gaining recognition in the capital markets and enhancing Bitcoin's credibility as an asset allocation choice, attracting more institutions to follow suit.

However, the story of Bitcoin reserves has matured. Early entrants have a first-mover advantage and voice, making it difficult for new entrants to replicate similar brand effects and market recognition. For most traditional institutions, allocating Bitcoin is more like a diversification strategy rather than a growth strategy.

New growth points and strategic opportunities are gradually shifting towards Ethereum. More and more institutions are starting to layout Ethereum reserve strategies. However, in terms of reserve logic, Bitcoin and Ethereum have taken different paths.

In the Bitcoin network, newly minted coins are directly distributed to miners as mining rewards. If an institution is not a miner, it must continuously buy Bitcoin to maintain its relative holding ratio from being diluted. In the Ethereum network, since the shift to a PoS consensus mechanism, one can earn newly added ETH as a reward by staking ETH and participating in network validation. For institutions, staking ETH can hedge against the dilution risk brought by the new ETH. Data shows that as of July 18, 35.8 million ETH have been staked, with stakers enjoying an annualized yield of 2.8%, while non-stakers face an annualized destruction rate of about 1.4%.

In other words, compared to waiting for appreciation after buying Bitcoin, Ethereum's reserve institutions can profit by participating in the network. Several listed institutions have taken the lead, and many publicly traded companies have initiated attempts at Ethereum strategic reserves, with initial successes. Some of these companies have even shifted their strategic reserves from Bitcoin to Ethereum. For them, ETH is not just a paper asset, but a productive asset for participating in the ecosystem, as well as a pathway to becoming institutional stakers.

The destruction mechanism of Ethereum further reinforces this logic. When the network is active, the amount of ETH destroyed increases. If the destroyed ETH exceeds the newly issued ETH, the network will enter a deflationary state. This not only enhances the scarcity of ETH but also increases the actual returns for stakers and validators, including MEV and transaction fee income, reinforcing the intrinsic value of ETH.

It is foreseeable that as more institutions enter and participate in the Ethereum staking market, they will no longer just be providers of funds in the market, but will take on the role of important stakers.

Currently, Ethereum's strategic reserve layout is in the early stages, and for companies looking to establish financial discourse power, ETH is still a fair competition that has not yet been monopolized.

The Staking Market Welcomes New Opportunities

As the Ethereum market becomes increasingly institutionalized, the staking market will also shift from being crypto-native to being institution-driven, moving towards a new phase of compliance and scaling.

In addition to institutions actively participating in staking through reserve assets, ETF issuers are also accelerating their layout. In recent months, several ETF issuers have submitted applications to regulators to add staking features.

Once these ETF institutional liquidity flows in large amounts, it will further expand the market size of the Ethereum staking track. Data shows that as of July 18, the total locked value of the liquid staking track on Ethereum reached 51.62 billion USD, close to an all-time high, up 142.5% from the low in April.

Industry insiders have pointed out that Ethereum's reserve enterprises have two special financing conveniences. In addition to using staking income as cash flow to support interest-bearing financing, they can also use staking income and on-chain DeFi operations as another dimension of the valuation model, which may offer a greater premium than a pure NAV model. Some companies have begun to invest their ETH reserves into basic DeFi operations such as lending, liquidity provision, and re-staking. This indicates that staking and other DeFi sectors may welcome a reassessment of value.

Although institutional attitudes are gradually becoming positive, they also require high standards for the security, compliance, and liquidity management capabilities of the protocols. Currently, multiple institutions have clear standards for selecting staking partners, emphasizing risk diversification and the capabilities of service providers, which may further marginalize the staking protocols of small and medium-sized nodes.

Currently, the Ethereum liquid staking market shows a significant head effect. As of July 18, 2025, the total locked value in the entire liquid staking track reached $51.62 billion, close to a historical high. Among them, a certain protocol dominates, with a total locked value exceeding $33.18 billion, capturing more than 60% of the market share, far ahead of other protocols. A few major platforms form the second tier, with total locked values all around the $1 billion level. The total locked values of other projects are mostly at tens of millions of dollars or even lower. In addition, Ethereum staking projects also include several projects covering sub-tracks such as re-staking, infrastructure, and LSTfi.

From various institutions accelerating their entry to ETF issuers continuously pushing forward, the market sentiment for Ethereum has been ignited. However, whether the reserve narrative can continue to support the sustained development of the staking market still requires time and practical testing.