What is the impact of spot ETFs on Ethereum compared to Bitcoin?

On July 23, the first wave of exchange-traded funds (ETFs) debuted in the United States, recording inflows exceeding $100 million.

Despite the strong start of these funds, it appears that their impact on Ethereum (ETH) will not be as strong as that seen on Bitcoin (BTC) after the launch of its ETFs earlier this year.

In its latest weekly report, CryptoQuant explained that new money inflows into digital asset products, such as ETFs, will have a weaker impact on Ethereum than on Bitcoin.

This is due to the different multiplier effects between the two networks.

According to analysts, Ethereum's multiple, which represents the ratio of change in market capitalization to realized value, is much lower than Bitcoin's multiple.

In 2024, Ethereum's multiplier remains low, meaning that Ethereum's market capitalization responds less to the influx of new money.

For example, for every $1 invested in Bitcoin, the market value of the asset increased by $5, while the market value of Ether increased by only $1.34 for every $1 invested.

The CryptoQuant report identified other factors that could hinder Ethereum from achieving the same growth that Bitcoin achieved after the launch of ETFs.

Among these factors is the increased supply of Ethereum.

Since the implementation of the Dencun upgrade on the Ethereum network in March, the supply of the coin has increased, as the upgrade introduced a new mechanism that allows data points and significantly lowers transaction fees, reducing the amount of ETH burned.

Before the Dencun upgrade, Ethereum upgrades ensured that the network remained in a deflationary state by burning a portion of transaction fees.

But since Dencun, Ethereum supply has been rising at an increasing rate, the fastest since the September 2022 merger.

At the time of publication, the total circulating supply of ETH was 120.22 million, and there is no cap on this supply, while Bitcoin has a cap of 21 million coins.

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