The U.S. SEC's July 29 approval of in-kind creations and redemptions for spot Bitcoin and Ethereum ETFs fundamentally altered fund mechanics, permitting direct digital asset transfers instead of cash. This structural shift reduces tracking errors and bid-ask spreads, aligning operations closer to commodity ETFs and potentially broadening institutional participation.
Simultaneously, Ethereum's Pectra upgrade—activated May 7 at epoch 364032—introduced EIP-7702 smart accounts for flexible transaction batching and EIP-7251, which raised validator balance limits to 2,048 ETH. These enhancements streamline wallet interactions and optimize large-scale staking operations, setting the stage for heightened network utility.
Spot Ethereum ETFs recorded $5.39 billion in July net inflows, lifting cumulative inflows to $9.7 billion and assets under management (AUM) to $19 billion since launch. Though a $152 million outflow occurred August 1, this aligns with early adoption patterns observed in comparable products. Meanwhile, Bitcoin ETFs continued dominating flows, with Ethereum's trajectory modeling potential capture of 30-40% of Bitcoin's year-to-date inflow pace—a scenario analysts project could propel ETH toward $5,000-$6,000 based on historical price elasticity.
Global crypto ETPs rebounded sharply last week with $572 million in inflows, reversing the prior week's break in a 15-week inflow streak. The surge followed the U.S. government's approval of digital assets in 401(k) retirement plans, catalyzing $1.57 billion mid-week inflows despite early $1 billion outflows linked to weak payroll data. Ethereum ETPs led with $270 million weekly inflows, pushing YTD inflows to a record $8.2 billion and AUM to $32.6 billion. Bitcoin ETPs followed with $265 million inflows after two weeks of outflows.
Current ETH/BTC ratios suggest significant upside potential: At Bitcoin's $121,684 price, ETH reaching $6,000 would yield a 0.049 ratio—still below prior cycle peaks. Elevated derivatives activity, including Ethereum futures open interest exceeding $30 billion in May, provides liquidity to support projected price movements.