BlackRock’s Crypto Shift: Ethereum Emerges as Institutional Favorite

BlackRock’s recent purchase of 10,000 Ethereum units (ETH) from Coinbase for approximately $26.2 million has sparked discussions about the firm’s evolving crypto portfolio and the broader institutional appetite for Ethereum. This move aligns with a broader trend of increased institutional participation in the cryptocurrency market, with spot Ethereum ETFs gaining traction since their approval in early 2024. As of July 2025, nine Ethereum ETFs are trading on U.S. exchanges, with total assets under management (AUM) across all Ethereum ETFs surpassing $12.1 billion. BlackRock, through its iShares Ethereum Trust (ticker: ETHA), is the largest among these, holding $5.6 billion in AUM as of the same period.

The purchase is part of BlackRock’s ongoing strategy to rebalance its cryptocurrency holdings. Over recent weeks, the firm has been actively selling Bitcoin and acquiring Ethereum. For instance, on June 2, 2025, BlackRock liquidated approximately 5,362 BTC (worth $561 million) and simultaneously withdrew 27,241 ETH (valued at $69.25 million) from Coinbase. This pattern of activity suggests a deliberate shift in focus from Bitcoin to Ethereum, driven by factors such as Ethereum’s deflationary supply dynamics, ESG appeal, and growing institutional adoption. Ethereum ETF inflows have been a key driver of this shift, with BlackRock leading the way. Over the last 11 days prior to the latest ETH purchase, BlackRock contributed $48.4 million to Ethereum ETF inflows, representing 62% of the $78.2 million in total inflows.

The impact of these inflows on the Ethereum market is evident. Ethereum ETFs have drawn significant institutional capital, reducing the amount of liquid ETH available on centralized exchanges. As of late July 2025, only 16.2% of Ethereum’s total supply—approximately 19.6 million ETH—remains on exchanges, a sharp decline from 25% in late 2023. This tightening of liquidity has been accompanied by a surge in Ethereum’s price, which increased by nearly 95% from $1,750 in early April 2025 to over $3,400 by the same period in July. The price action has coincided with strong ETF inflows, particularly during volatile periods when Ethereum outperformed Bitcoin.

The potential for Ethereum ETFs to generate even more demand is further supported by the anticipated approval of staking within these products. While Ethereum’s proof-of-stake mechanism currently generates an average annual yield of 3–4%, staking functionality is not yet permitted within ETFs. However, several major asset managers, including BlackRock, have filed proposals with the U.S. Securities and Exchange Commission (SEC) to incorporate staking into their Ethereum ETF structures. If approved—expected as early as Q4 2025—this development would allow these ETFs to generate additional returns beyond price appreciation, potentially attracting more institutional capital.

Looking ahead, Ethereum ETFs are expected to remain a key driver of market dynamics. Bitwise analysts forecast that institutional investments in Ethereum could reach $20 billion in the next year, driven by ETF adoption and broader institutional interest. This anticipated influx could create a demand-supply gap, as Ethereum’s issuance rate—projected at 800,000 ETH annually—may struggle to meet rising demand. The result could be increased price volatility, particularly if macroeconomic conditions or regulatory developments introduce uncertainty.

BlackRock’s recent purchase of 10,000 ETH underscores the growing confidence in Ethereum’s long-term potential. As the market continues to evolve, Ethereum ETFs are likely to play a pivotal role in shaping the asset’s trajectory, especially as staking capabilities and regulatory clarity emerge. The firm’s strategic rebalancing and continued inflow leadership suggest that Ethereum is becoming an increasingly important component of institutional investment strategies.