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$5.4 Billion in July Inflows May Propel Ethereum Toward $6,000 in Its Largest Rally to Date
The approval by the U.S. Securities and Exchange Commission for in-kind creations and redemptions for spot Bitcoin and Ethereum exchange-traded funds on July 29 has transformed the manner in which authorized participants engage with these products, allowing for direct transfers of digital assets instead of cash.
This modification in structure is anticipated to minimize tracking error and bid-ask spreads, aligning the operational framework more closely with commodity ETFs and potentially expanding the investor demographic.
The timing coincides with Ethereum’s Pectra upgrade, which was implemented on May 7 at epoch 364032 and introduced EIP-7702 smart accounts along with EIP-7251’s enhancement of the validator effective balance limit to 2,048 ETH. These modifications are designed to simplify wallet interactions and increase validator capacity, facilitating new applications for both individual users and large-scale staking operations.
In July, spot Ethereum ETFs in the U.S. experienced net inflows of approximately $5.39 billion, as reported by SoSoValue data. This raised total inflows to around $9.7 billion and an AUM of $19 billion since inception. The series of daily inflows concluded on August 1 with a net outflow of about $152 million, a single-day reversal that remains within the range seen during the early adoption phase of similar products.
In contrast, spot Bitcoin ETFs continue to attract larger net flows, with public dashboards from Farside Investors and SoSoValue indicating year-to-date inflows that serve as a benchmark for estimating Ethereum’s potential trajectory. Should Ethereum capture 30 to 40% of Bitcoin’s YTD inflow rate, the resulting capital allocation could be adequate to push prices toward the $5,000 to $6,000 range based on historical price elasticity.
Bitcoin / Ethereum ETF ratio
At present market levels, with Bitcoin trading around $121,684 and Ethereum at roughly $4,280, an Ethereum price of $5,000 would elevate the ETH/BTC ratio to approximately 0.041, while $6,000 would increase it to about 0.049. These ratios remain below the peaks achieved in previous market cycles, indicating potential for relative performance changes if capital rotation takes place.
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The derivatives market is equipped to support such movements, with Ethereum futures open interest exceeding $30 billion in May and options activity remaining robust into the third quarter, offering liquidity for both hedging and directional strategies associated with spot ETF flows.
Pectra’s smart account capabilities enable transactions to be conducted with enhanced flexibility, incorporating features such as transaction batching and meta-transactions, which can improve the user experience for both retail and institutional participants.
The increased validator balance limit allows for more effective capital deployment for large operators, potentially consolidating validator infrastructure while also enhancing staking economics for entities managing high-capacity nodes.
As the network evolves post-upgrade, these protocol-level advancements intersect with enhancements to the ETF market structure, establishing conditions where capital inflows can more directly influence on-chain activity.
Institutional allocation behavior will remain a pivotal element in the upcoming months. The combination of reduced operational friction in ETF trading and protocol upgrades that facilitate scaling may attract new categories of investors who seek both efficient market access and network-level capacity.
Tracking the ratio of Ethereum to Bitcoin inflows, changes in ETH/BTC, and on-chain staking trends will be crucial in evaluating whether the conditions for the anticipated price range come to fruition.
The interplay of ETF structural changes and protocol advancements has established the framework for the next phase of Ethereum’s market performance.
| BTC base price ($) | ETH $5,000 (ratio) | ETH $5,500 (ratio) | ETH $6,000 (ratio) |
|---|---|---|---|
| $121,684 | 0.0411 | 0.0452 | 0.0493 |
| $130,000 | 0.0385 | 0.0423 | 0.0462 |
| $140,000 | 0.0357 | 0.0393 | 0.0429 |
The post Why $5.4 billion in July inflows could fuel Ethereum’s biggest rally yet toward $6k appeared first on CryptoSlate.
