Ethereum may be on track to challenge Bitcoin’s long-standing status as the ultimate store of value in the digital asset ecosystem, according to VanEck’s July crypto market recap.
In a detailed breakdown of evolving treasury trends and macroeconomic policy shifts, VanEck’s head of digital assets research team, Matthew Sigel, argues that Ethereum’s increasingly deflationary monetary structure, staking yields, and tokenholder-centric governance may offer advantages over Bitcoin’s rigid design.
“Ethereum may arrive at an economic system that favors its tokenholders more than Bitcoin’s,” the report stated.
Ethereum treasuries gaining ground
Bitcoin’s fixed supply cap, consistent issuance schedule, and high liquidity made it the go-to choice for firms looking for a hedge against inflation. Bitcoin’s monetary policy has remained largely unchanged since its inception, which is often praised as its greatest strength. But that rigidity may also be a weakness, VanEck suggests.
Ethereum-based digital asset treasuries (DATs) are gaining momentum, not just for their exposure to price appreciation but also for their ability to generate yield. Firms that hold ETH can stake their assets to earn validator rewards and collect network transaction fees.
Also, ETH treasuries can participate in decentralized finance (DeFi) protocols to further boost returns, a strategy not as easily accessible to Bitcoin holders.
The report points out that ETH treasuries are replicating traditional BTC strategies, such as financing additional purchases or options hedging, while also stacking ETH at a faster rate via staking and DeFi.
Deflationary turn strengthens the case
Ethereum’s monetary evolution has played a central role in changing its growing appeal. Initially launched with a higher inflation rate than Bitcoin (14.4% vs. 9.3%), Ethereum has since implemented two fundamental changes that drastically altered its supply dynamics.
The first was EIP-1559, introduced in August 2021, which implemented a mechanism to burn base transaction fees, effectively removing ETH from circulation with each network interaction.
The second was Ethereum’s landmark transition from proof-of-work to proof-of-stake via “the Merge” in September 2022. This reduced daily ETH issuance from approximately 13,000 to around 1,700.
As a result, Ethereum’s inflation dropped below Bitcoin’s by March 2023. Between October 2022 and April 2024, ETH’s supply actually decreased, registering an annualized deflation rate of -0.25%. Though ETH’s inflation has risen slightly since then due to increased network throughput, its annual rate remains at just +0.38%, compared to Bitcoin’s +0.84%.
Bitcoin, on the other hand, continues to rely on inflationary issuance to reward miners, raising long-term sustainability questions, especially as halving events reduce miner rewards.
In the past year, Bitcoin miners earned just $278 million in transaction fees but $14.6 billion from network inflation. If Bitcoin’s price fails to keep up with declining block rewards, the network’s security model may face pressure to adapt.
One proposed solution, a hard fork introducing new inflation, would contradict one of Bitcoin’s foundational principles, which is its “fixed supply.”
VanEck’s argument is reinforced by the growth of Ethereum on public companies’ balance sheets, up to 966,000 ETH (worth about $3.5 billion) from just 116,000 at the end of 2024.
Institutional demand for ETH has also surged, thanks in part to inflows from newly approved spot Ethereum ETFs and regulations that have clarified and pushed stablecoins to mainstream prominence. Over the last month, ETH’s price has climbed 54%, outpacing Bitcoin’s 10% rise.
Despite uncertainties around ETH’s long-term inflation path, analysts believe its current trajectory and utility make it a credible store of value.
