The trend of professional investors bypassing Bitcoin in favor of Ethereum as their first crypto investment is gaining momentum, according to Bitwise CIO Matt Hougan. In a recent update on X, he highlighted how Ethereum’s utility in decentralized finance, smart contracts, and Web3 applications is attracting institutional capital, shifting the spotlight away from Bitcoin.
Hougan explained that institutional investors typically do not hold gold in their portfolios, with only a small percentage allocating to the precious metal. As Bitcoin is often compared to digital gold, it may not appeal to those who prefer investing in innovative technologies. Ethereum, on the other hand, aligns better with the portfolios of investors looking for exposure to cutting-edge technologies, especially with the rise of tokenization and stablecoins driving institutional interest in ETH.
As institutions increasingly view Ethereum as the technological backbone of a digital economy, the demand for ETH among US institutional investors has reached unprecedented levels. In August 2025, Ethereum Spot ETFs purchased $3.87 billion worth of ETH, with major asset manager BlackRock leading the charge by allocating significant amounts to ETH over Bitcoin.
This surge in institutional buying has propelled Ethereum to new all-time highs, with the majority of purchases intended for long-term holdings. The influx of institutional capital has also boosted Ethereum’s transaction volumes, surpassing $320 billion on-chain, and staking has become a key focus for Wall Street, with a significant portion of ETH locked in staking contracts.
With Ethereum offering staking rewards and a steady dividend, institutional investors are finding it increasingly attractive for long-term investment strategies. If ETH closes above $4,630, it will mark the highest monthly close since the 2021 bull run, signaling strong momentum for the cryptocurrency.
In conclusion, Ethereum’s growing appeal among professional investors as their first choice for crypto investments is reshaping the landscape of digital assets, with institutions recognizing the value and potential of ETH in the evolving financial ecosystem.