Is it Catching Up with Bitcoin?

In our earlier analysis report titled Bitcoin’s Liquidity Trifecta: Unpacking Liquidity Across On-Chain Data, Market Microstructure and Macro Drivers, we explored how varied liquidity indicators might reveal underlying capital flows and liquidity situations for bitcoin. Applying that very same framework to ether (ETH) provides us useful perception into its present liquidity profile — each on-chain and within the broader market. In this replace, we additionally spotlight the rising position of digital asset treasuries (DATs) which have emerged as a key driver behind ETH’s current rally.

Webinar alert: On September 9 at 11:00am ET be a part of Michelle Noyes from AIMA and Andy Baehr from CoinDesk Indices as they focus on constructing a sustainable enterprise within the cyclical markets of crypto. Register at present. https://aima-org.zoom.us/webinar/register/4917558078322/WN_3jAGIrqMTK2z7e74q5bkWg#/registration

Event alert: CoinDesk: Policy & Regulation in Washington D.C. on September tenth. The agenda consists of senior officers from the SEC, Treasury, House, Senate and OCC, plus non-public roundtables and unparalleled networking alternatives. Use code COINDESK15 to avoid wasting 15% in your registration. http://go.coindesk.com/4oV08AA.

1. Realized cap: measuring new capital inflows

Realized cap tracks the online USD-denominated capital invested in a token, reflecting the cumulative value foundation of all holders. Since the cycle low in November 2022, ETH has absorbed over $81 billion in contemporary capital inflows, pushing its realized cap to a brand new all-time excessive of $266 billion as of August eighth, 2025.

For context, this represents a 43% improve for ETH over the interval — substantial, however nonetheless nicely under bitcoin’s 136% rise in realized cap. The slower progress price means that whereas ETH has been attracting significant new funding, there should be ample room for growth as institutional curiosity accelerates.

2. Unhedged spot ETH ETF demand: monitoring institutional allocation

In our bitcoin research, we developed a way to estimate real institutional demand by isolating ETF inflows not tied to hedged arbitrage trades. Applying this framework to ETH exhibits that 80–90% of spot ETH ETF inflows are possible real institutional allocations, with the rest pushed by arbitrage methods — lengthy spot positions hedged through CME futures to seize worth differentials.

Interestingly, the proportion of arbitrage-related flows is way larger for ETH than bitcoin, the place solely round 3% of spot ether ETF inflows are estimated to be arbitrage-based. This highlights that institutional allocation to ETH nonetheless lags behind BTC, although we count on this hole to shut steadily with the current inflow of institutional curiosity within the cryptocurrency.

Data supply: Avenir, CFTC, Glassnode

3. Futures and choices open curiosity: gauging derivatives progress

As of July twenty first, mixed open curiosity (OI) in ETH futures and choices stood at $71 billion. However, not like bitcoin — the place OI in perpetual futures and choices is almost balanced — ETH choices OI stays lower than half of perpetual futures OI.

Given that choices are extra typically utilized by skilled merchants and establishments, this imbalance signifies that institutional derivatives participation in ETH nonetheless has vital room to develop.

4. Limit order ebook imbalance: studying market sentiment

Order ebook evaluation reveals notable sentiment shifts. When ETH regained $3,800 in July after 7 months, a robust sell-side skew emerged on the restrict order books (LOB), suggesting intense, long-awaited profit-taking. But as the worth retraced towards $3,300, buy-side depth elevated considerably, signaling “buy-the-dip” conduct at that stage. Since then, the order ebook has proven a extra balanced supply-demand profile, suggesting no excessive positioning from the market at current.

Data supply: Avenir, Binance

5. Digital asset treasuries (DATs): rising structural patrons of ETH

A brand new and more and more vital supply of demand for ETH comes from DATs — firms that diversify into ETH by holding it on their steadiness sheets. For instance, Bitmine and Sharplink are two of essentially the most notable representatives of this development.

Since April, DATs have gathered roughly 4.1 million ETH ($17.6 billion), representing about 3.4% of the circulating provide; Bitmine alone accounts for 1.3%. For context, U.S. spot ETH ETFs at present maintain 5.4% of ETH whole provide. This highlights the size of those structural allocations from DATs.

What units DAT flows aside is their long-duration nature. Unlike futures merchants or ETF arbitrage inflows, treasury allocations are much less more likely to rotate capital continuously, making them a supply of sticky structural demand.

Conclusion

Across on-chain and off-chain liquidity metrics, one theme is evident: ETH’s institutional participation remains to be within the early levels in comparison with bitcoin. Realized cap progress, ETF influx composition and derivatives market construction all level to vital untapped potential.

At the identical time, DAT allocations have gotten a strong driver of sustained ETH flows, very like how company steadiness sheet methods reminiscent of Strategy created a brand new structural demand channel that helped gas bitcoin’s rally in late 2024.

If institutional adoption of ETH follows a trajectory much like bitcoin’s, the approaching months might see significant capital inflows, and with them, the potential for outsized efficiency.