Bernstein Analysts Highlight Ethereum’s Key Advantages

Institutionalisation, stablecoins, and tokenisation are at the heart of financial innovations on public blockchains like Ethereum, according to Bernstein experts, reports The Block.

“Bitcoin is great, we love it and still believe in reaching the $200,000 level. This is our conservative but justified target in this cycle,” the analysts noted.

However, investor interest is gradually expanding beyond the sole function of value preservation. According to the experts, many market participants are beginning to notice “early signs of financial innovations revealed by blockchain.”

“Some still separate the ‘useful blockchain’ from the ‘useless crypto,’ but Ethereum deserves recognition,” they emphasised.

Since the launch in January 2024, US spot Bitcoin ETFs have become some of the most successful investment products in history. In less than two years, their AUM exceeded $130 billion. 

Similar products based on Ethereum, which appeared slightly later, remained in the shadows — managing only $9.8 billion. However, given Ethereum’s market capitalisation (just over $300 billion compared to Bitcoin’s $2.1 trillion), such a gap is quite understandable, the analysts noted.

Ethereum’s uniqueness lies in its role as a decentralised computer, the experts explained. According to them, stablecoins and tokenisation are native use cases for the network of the second-largest cryptocurrency by capitalisation.

“It is not surprising that as institutional interest in Ethereum grows, we are witnessing an increase in capital inflows into Ethereum ETFs. Over the past 20 days, inflows have amounted to $815 million. Since the beginning of the year, the net inflow has turned positive, reaching $658 million,” the analytical note states.

The crypto industry is entering a phase where the focus shifts from speculative trading to blockchain innovations, Bernstein believes. Activity is moving “from trading meme tokens to open financial infrastructure for capital markets, payments, and next-generation fintech — in conjunction with stablecoins and tokenisation.”

A Turning Point

Payment giants like Visa, Mastercard, and Stripe are already working on strategies in the stablecoin segment, Bernstein notes. The adoption of blockchain innovations by “real companies and institutions” enhances the value of networks and native assets such as ETH.

“Investors always told us: ‘Crypto is useless, blockchain is important.’ But these are inseparable. If you believe in payment innovations based on stablecoins, why do you not value Ethereum, which issues these ‘stable coins’ and processes transactions? Any company using such technologies pays fees to the Ethereum network. This is no longer just utility but real value accumulation. We are confident that the narrative around the value of public blockchains has reached a turning point. This is beginning to manifest in the growing interest in Ethereum through ETFs,” the experts shared their thoughts.

They also noted the growing adoption of distributed ledger technology-based solutions among leading crypto companies. In particular, the pilot for accepting stablecoins as payment by Coinbase, as well as the development of the L2 network Base. Additionally, the analysts mentioned the RWA initiative by Robinhood and Kraken’s plans to launch trading of tokenised US stocks for users outside the country.

“Our goal is to help institutional investors ‘connect the dots’ […]. Coinbase and Robinhood are no longer just platforms for trading cryptocurrencies; they are building financial applications on the blockchain. Yes, not all tokens have value. But fundamental native assets like Ethereum today are transitioning from speculative toys to tools of real financial innovations,” Bernstein noted.

In conclusion, the analysts emphasised that as the market becomes aware of the ongoing transformation, the positive feedback loop effect intensifies — more investors begin to pay attention to alternatives to Bitcoin.

As reported, Ethereum developers proposed an EU-compliant protocol design.