According to a VanEck report, Ethereum may overshadow Bitcoin as the leading store of value in the digital asset ecosystem due to its deflationary monetary structure and income-generating potential.
Ethereum Treasuries Gaining Popularity
Bitcoin has traditionally been viewed as a reliable hedge against inflation due to its fixed supply and high liquidity. However, VanEck contends that this rigidity may limit its potential. Ethereum-based Digital Asset Treasuries (DATs) are gaining traction not only for their value appreciation but also for their ability to generate income. Firms holding ETH can stake their assets to earn validator rewards and network transaction fees. Additionally, ETH treasuries have the opportunity to engage in decentralized finance (DeFi) protocols, a strategy less accessible for Bitcoin holders.
Deflationary Changes Strengthen Ethereum's Position
The monetary evolution of Ethereum has been pivotal in enhancing its appeal. Initially launched with a higher inflation rate than Bitcoin (14.4% vs. 9.3%), Ethereum has implemented significant changes, notably EIP-1559 in August 2021, and the transition to Proof-of-Stake in September 2022. These changes significantly reduced daily ETH issuance from about 13,000 to 1,700. As a result, by March 2023, Ethereum's inflation rate fell below Bitcoin's, with actual supply decrease of -0.25% occurring between October 2022 and April 2024.
Institutional Demand for Ethereum Rising
Ethereum's total held by public companies grew to 966,000 ETH (approximately $3.5 billion) from just 116,000 at the end of 2024. Institutional interest in ETH has surged, partly due to new approvals of Ethereum ETFs and clarifications in regulation that propelled stablecoins into mainstream prominence. Over the last month, ETH's price rose 54%, which significantly outpaces Bitcoin’s 10% increase. Analysts believe that despite uncertainties regarding ETH’s long-term inflation path, its current trajectory and utility are establishing it as a credible store of value.
Expert opinions suggest that Ethereum has a strong potential not only to compete but also to surpass Bitcoin as a store of value asset, driven by its innovative approaches and structural transformations.
