Reasons why Ethereum ETF investors outperform Bitcoin ETFs
Jul 29, 2025 pm 05:03 PMEthereum ETF investors perform better than Bitcoin ETFs. 1. Ethereum has the interest-generating asset attributes brought by the smart contract ecosystem, and achieves an annualized compound return of 4-6% through pledge and DeFi; 2. Ethereum is more elastic in the bull market, benefiting from leverage effect, growth stock positioning and EIP-1559 deflation model; 3. Ethereum ETF creates additional alpha through pledge return reinvestment, such as Purpose ETF's annualized increase by 3.2%; 4. The more relaxed regulation makes the Ethereum ETF management fee as low as 0.25%, saving 15-30bp cost compared to Bitcoin ETFs. The average return of Ethereum ETF in the first half of 2024 reached 42%, which is higher than Bitcoin ETFs. At 11 percentage points, this advantage may continue to strengthen with the growth of L2 users, but Bitcoin ETFs are more defensive during the risk aversion period.
The reasons why investors in Ethereum ETF perform better than Bitcoin ETFs can be analyzed from three dimensions: market structure, asset characteristics and investment logic:
1. Differences in technical dividends of underlying assets
As a smart contract platform, Ethereum's ecological applications (DeFi, NFT, Layer2) continue to grow explosively. Data from Q3 2023 showed that Ethereum’s on-chain TVL (total locked value) rose 58% year-on-year, while Bitcoin lacks ecological returns as a value storage tool during the same period. This difference makes Ethereum have stronger "interest-generating assets" attributes, and institutional investors value the compound returns brought by pledge (annualized 4-6%) and ecological growth.
2. Differences in beta coefficients in market cycles
Ethereum shows stronger market elasticity. During the 2024 bull market cycle, the ETH/BTC exchange rate rebounded from 0.05 to 0.065, an increase of 30%. This comes from:
Leverage effect : Ethereum futures funding rates are lower than Bitcoin for a long time, and derivatives market structure is healthier
Institutional configuration logic : Bitcoin is regarded as "digital gold", while Ethereum is regarded as "technology growth stock", and is more popular in the rising cycle of risk appetite
Deflation model : After the implementation of EIP-1559, Ethereum's annual net destruction rate reached 0.8%, forming a dynamic balance between supply and demand
3. Advantages of ETF product design
Ethereum ETFs generally adopt the "staking income reinvestment" mechanism. Taking Purpose Ether ETF as an example, it can obtain 3.2% additional returns through annualized institutional-level node pledges. This part of the alpha significantly outperforms the Bitcoin ETF that simply tracks spot prices under the compound interest effect. By contrast, Bitcoin ETFs can only obtain underlying asset price returns.
4. Regulatory arbitrage window
The SEC's scrutiny of Ethereum ETFs (not identified as securities), making fund management fees as low as 0.25%, an average of 15-30bp lower than Bitcoin ETFs. This cost advantage has a significant difference in long-term holding.
Current market data shows that the average return of Ethereum ETF in the first half of 2024 reached 42%, 11 percentage points higher than that of Bitcoin ETF. As the daily active users of Ethereum L2 network exceeds 5 million (more than Bitcoin’s entire network users), this fundamental advantage may continue to be strengthened. But it should be noted that in the era of extreme risk aversion, Bitcoin ETFs will still show stronger defensive characteristics.
The above is the detailed content of Reasons why Ethereum ETF investors outperform Bitcoin ETFs. For more information, please follow other related articles on the PHP Chinese website!

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