If the Ethereum ETF attracts another $3.9 billion in Q4, the supply lockup may break 10%!

In August, the Spot Ethereum (ETH) exchange-traded fund (ETF) recorded a net inflow of about 3.9 billion USD, while the US Bitcoin ETF experienced a net outflow of about 750 million USD. This round of fund rotation continues the trend since July, where institutional funds are accelerating their flow towards ETH, while BTC faces intermittent withdrawals.

If this pace continues in the fourth quarter, the holdings of the Ethereum ETF will nearly double by the end of the year, accounting for over 10% of the circulating supply, which could fundamentally change the benchmark for institutional cryptocurrency asset allocation.

August Capital Flow: ETH Strongly Attracting Capital, BTC Under Pressure

According to data from VettaFi and SoSoValue, the daily net creation of ETH ETF surpassed $1 billion for the first time in mid-August, driving the cumulative net inflow for the month to $3.9 billion. In contrast, Bitcoin ETF had a net outflow of $750 million that month, continuing the trend of capital differentiation since the summer.

This phenomenon continued the historic breakthrough of July — during that month, ETH investment instruments attracted a net inflow of 5.4 billion USD, nearly matching the scale of BTC funds.

Impact of ETF Expansion on Supply

Currently, the US Spot ETH ETF holds over 6.3 million ETH, accounting for about 5% of the circulating supply of 120.7 million coins. In comparison, the Bitcoin ETF's holdings are approximately 1.29 million BTC, accounting for about 6–7%.

If the Ethereum ETF attracts another $3.9 billion in Q4, the cumulative net inflow will exceed $11 billion, and the holding size will almost double to over 10% of the circulating supply, comparable to the penetration rate of Bitcoin ETFs.

This will mean that the freely tradable ETH in the spot market decreases, which may exacerbate liquidity tightening during periods of high demand and affect the price discovery mechanism.

Potential Changes in Price and Market Structure

At the end of August, the ETH/BTC exchange rate reached a new high for 2025, reflecting the relative strength of ETH driven by capital inflows. JPMorgan's analysis points out that this divergence comes from four main factors:

1. Stable demand for ETF funds

2. The proportion of institutions directly allocating ETH has increased.

3. Adopt a more favorable regulatory stance towards staking.

4. The maturation of the ETF creation and redemption mechanism

If the ETF continues to attract capital, the weight of ETH in institutional investment portfolios may match BTC for the first time, and even surpass it in some strategies.

Long-term Impact on Issuers and Market Participants

The expansion of ETF scale not only affects prices but will also change the operation of market infrastructure:

Arbitrage and liquidity management: A larger ETF asset pool means more assets are subject to redemption and creation mechanisms, affecting the strategies of market makers and liquidity providers.

Custody and settlement: An increase in the scale of positions will increase the asset management pressure on custodians, driving the upgrade of related infrastructure.

Institutional allocation benchmark: If the ETH penetration rate reaches the current level of BTC, it will become the new standard for institutional allocation of crypto assets, affecting portfolio construction in 2026 and beyond.

Conclusion

If the Ethereum ETF continues the fundraising pace of August in the fourth quarter, the holdings by the end of the year could exceed 10% of the circulating supply. This not only may drive the ETH price further up but also reshape institutions' allocation logic towards crypto assets. This ETF funding frenzy might become a key turning point in the history of Ethereum.