Ethereum ($ETH) - The Digital Oil
- J
- Jul 27
- 9 min read
I'm definitely not a "crypto bro" by any means. I've long stayed away from the space in general, due to most of it being simply about hyping up so-called "shitcoins". However, since the end of 2024, I’ve steadily increased my exposure to Ethereum specifically. Not by buying the coins outright, but through certificates and stocks that correlate with $ETH. This isn’t a spur-of-the-moment general crypto hype but rather an evolving conviction that the Ethereum network and its native asset ETH will play a major role in the future financial ecosystem.
Just recently, on 22 July, BlackRock’s spot‑Ethereum ETF (ticker ETHA) attracted about $440 million in net inflows, lifting its July total to well over $4 billion and signaling accelerating institutional demand for ETH exposure. In this post, I’ll dive into why Ethereum is interesting to me in an investment portfolio, how it compares to Bitcoin, the new crucial role of stablecoins, the emergence of ETH-focused public companies, and where Ethereum could be headed in the coming years.
From Digital Gold ($BTC) to Digital Oil ($ETH)
Bitcoin often gets called “digital gold,” and for good reason. It took about 15 years for Bitcoin to gain recognition as a scarce, non-sovereign store of value. An asset, like gold traditionally, that governments can’t debase. Ethereum, on the other hand, has a broader actual utility. Ethereum complements Bitcoin in that it not only can store value, but also enables the transfer and coordination of value globally through smart contracts and decentralized applications.
So why call ETH “oil”? Because on the Ethereum network, ETH is used to pay for transactions and run programs. It’s the fuel that powers everything from simple payments to complex decentralized finance (DeFi) applications. Importantly, ETH can be productive: holders can stake their ETH (locking it in to help secure the network) and earn yield, typically around 4-5% annually. This staking yield means Ethereum almost functions a bit like a bond or dividend-paying asset. According to a very detailed June 2025 report "The Bull Case for ETH", ETH’s unique dual nature is as a store of value and a utilitarian asset, effectively making it “a productive reserve asset” in the digital economy.
None of this is to pit Bitcoin against Ethereum as rivals. In fact, I see them as complementary holdings. Bitcoin pioneered the notion of de-decentralized scarcity and thus a non-inflationary monetary asset. Ethereum built on that to create a programmable platform. Ethereum’s versatility and network effects give it a different investment profile which I find particularly compelling going forward.
Ethereum’s Evolving Role
We’re at a point where entire asset classes and financial instruments are moving on-chain (onto blockchain networks). This ranges from stablecoins (crypto tokens pegged to fiat currencies) to stocks, bonds, real estate, and more being tokenized (represented as digital tokens).
Ethereum has now clearly emerged as the default platform for these tokenized assets. Roughly 80 % of all tokenized real‑world assets (RWAs) now settle on Ethereum.
Why is everyone using Ethereum’s network? Two things; trust and network effects. Ethereum is the most secure, decentralized blockchain in the world, with unparalleled reliability (no downtime in years). It has persisted over quite some time, and thus also gained reputationally as well. If you’re an institution moving high-value assets on-chain, you want the network with the strongest track record and broadest developer support. Ethereum checks those boxes, which is why it’s trusted by leading asset managers and fintech infrastructure providers.
Stablecoins
Let’s talk stablecoins, because they’re a huge piece of Ethereum’s story. Stablecoins are digital tokens pegged to stable assets (usually the US dollar).
They let people hold and transfer USD value on blockchain rails, without needing a bank. This concept has exploded in use. By mid-2025, stablecoins across all networks reached over $260 billion in market value, and the vast majority of that is on Ethereum. People across the globe, especially in emerging markets, are using stablecoins to access dollars in places where the local currency is unstable. For the first time, anyone with an internet connection can effectively hold a USD balance (via a stablecoin) outside the traditional banking system. This global demand for dollars is booming via stablecoins, even if there’s talk of “de-dollarization” in politics.
This matters a lot for the ETH thesis. Every time someone uses a stablecoin on Ethereum, they are indirectly using (and depending on) the Ethereum network.
As Electric Capital’s Maria Shen put it, “Ethereum is uniquely positioned to host the global financial infrastructure for this new digital dollar economy, and ETH stands to benefit directly from this growth.” In other words, Ethereum is becoming the primary settlement layer for internet-native dollars, and ETH (the asset) accrues value from that activity. As Ethereum’s economy grows, the ETH token becomes the reserve asset underpinning it. If stablecoins are the dollars being used worldwide,
Ethereum is the banking and payment network facilitating those dollars.
This dynamic could make ETH akin to a reserve asset for a large swath of global commerce, much like U.S. Treasuries underpin the traditional financial system.
Another aspect of Ethereum’s future role is scalability. Critics used to argue Ethereum was too slow or expensive to handle global volume. But Ethereum’s roadmap has evolved with the transition to Proof-of-Stake and innovations like Layer-2 rollups. Rollups are secondary networks (like Arbitrum, Optimism, zkSync, and others) that execute thousands of transactions and then post a summary back to Ethereum. This keeps Ethereum as the secure base layer while extending capacity by orders of magnitude. The result is Ethereum can maintain decentralization and security while handling far more activity (and at lower user fees) via these rollups. It’s still early, but we’re already seeing huge growth in Layer-2 usage, which again ultimately boosts the demand for Ethereum’s blockspace and, by extension, for ETH (since fees on rollups eventually settle in ETH on the main chain).
Crucially, U.S. regulators have also been warming up to this innovation. Policy is slowly catching up, with clearer frameworks for digital assets, and even formerly cautious institutions are now exploring Ethereum-based applications. For instance, Visa has rolled out its Tokenized Asset Platform (VTAP) so banks like BBVA can issue fiat‑backed tokens on the public Ethereum blockchain, and JPMorgan just began piloting a USD deposit token (JPMD) on Base, an Ethereum Layer‑2 network. The institutional embrace (albeit a small one so far..) is happening in a way we haven’t seen before.
ETH’s Value Proposition
Despite all these strengths, Ether (ETH) the asset has been surprisingly underpriced in the market, in my view. Even after the big rally off the 2022 lows, ETH in mid-2025 was still trading well below its late-2021 all-time high (which was around $4,800). Meanwhile, Ethereum’s fundamentals have only improved.
Since 2021, Ethereum has transitioned to proof-of-stake, reducing new ETH issuance by ~90%, and introduced a fee-burning mechanism (EIP-1559) that permanently removes some ETH from circulation with every transaction. These changes mean Ethereum’s supply is now essentially flat or even deflationary in high demand periods – in fact, since September 2022, ETH’s net inflation rate has hovered near 0.09%, lower than Bitcoin’s ~1.7% annual inflation and far lower than any fiat currency. Add to that the staking yield (which encourages holding and locking up ETH), and you have an asset that is scarcer and more useful than it was a few years ago, yet the market price hasn’t caught up to these new realities.
A group of Ethereum researchers and investors noted in their June 2025 analysis that ETH remains one of the most significantly mispriced opportunities in global markets. They argue (and I agree) that Ethereum’s lag behind Bitcoin is a temporary mispricing, not a structural weakness, creating a potential asymmetric opportunity for investors. Ethereum’s core metrics (network usage, security, developer activity, etc.) and its improvements (like reduced supply growth and added yield) suggest it should be valued higher relative to more static assets, and that this disconnect likely won’t last forever.
Again, as previously mentioned, network effects are also crucially important here in the ETH story. Ethereum has by far the largest developer community in crypto, the most value settled, and the most rich ecosystem of applications (from DeFi protocols to NFTs and beyond). These themselves create a moat that is hard for any would-be “Ethereum killer” to overcome. Competing blockchains exist (Solana, Binance Chain, etc.), but none combine Ethereum’s security, decentralization, and institutional credibility.
Meanwhile, Bitcoin, as noted, lacks the programmability to capture many of these use cases. So Ethereum sits in a sweet spot: it’s the general-purpose blockchain of choice and it has the credibility of being battle-tested like Bitcoin. This strong positioning makes me comfortable that ETH’s long-term value will at a minimum track the growth of the overall blockchain economy.
The Ethereum “Treasury” Phenomenon
A surprising (and very interesting) recent development, which actually inspired me to add even more to my ETH exposure, is the emergence of Ethereum-focused public companies. We saw how MicroStrategy ($MSTR) famously accumulated (and still continues to accumulate) Bitcoin for its treasury, becoming a de facto Bitcoin treasury holding company.
Now Ethereum is getting its own “MicroStrategies”, so to speak. Two unlikely firms have led the charge: SharpLink Gaming ($SBET) and Bitmine Immersion Technologies ($BMNR). These companies, coming from completely different origins, have completely pivoted to become Ethereum treasuries, essentially acting as ETH-backed stock proxies.
Bitmine’s new chairman for this venture is of course none other than Tom Lee, a well-known Wall Street strategist (of Fundstrat fame). Lee has explicitly compared Bitmine’s strategy to MicroStrategy’s playbook, i.e raising capital and plowing it into ETH, then staking that ETH for yield. In his words, Bitmine aims to become an “Ethereum-era central bank” or reserve-like institution for the crypto world.
Ethereum co-founder Joseph Lubin (of ConsenSys) serves as Chairman of SharpLink and has publicly cheered the friendly “arms race” between SharpLink and Bitmine. On Bitmine’s side, aside from Tom Lee, there’s serious investor muscle in the form of billionaire Peter Thiel who took a 9% stake in Bitmine, and Cathie Wood’s ARK Invest fund which recently bought over $170 million worth of Bitmine stock, making it a 1.5% position across three ARK ETFs. When you see huge tech investors like Thiel and Cathie Wood pivoting into Ethereum plays, it reinforces the sense that “serious capital” is rotating into ETH. This is a great signal for me.
Final Words
Bringing it all together, my investment thesis for Ethereum is the following: Ethereum already underpins the largest pool of stable‑value dollars on‑chain, most of DeFi, and a growing share of tokenised real‑world assets. Ether (ETH) is the scarce, yield‑bearing commodity that makes that engine run. Supply growth is near zero and institutional ownership is steadily increasing.
Network moat: strongest security, developer base and institutional mind‑share compared to others in the space. Clear, clear second to Bitcoin and they are complementary assets, not substitutes.
Monetary upside: net supply hovers at zero or negative, while staking pays ≈ 4 % in native yield, turning ETH into a scarce, income‑bearing asset.
Mispricing: price still lags the fundamentals.
This combination of tight supply, growing utility, and accelerating institutional interest, is why ETH is one of my high‑conviction long‑term holdings. Until the above changes, this will continue to be the case. It's not a main holding in my portfolio by any means, but I view it as an interesting smaller play right now.
Disclaimer: I’m long ETH via investment products, and this write-up is for informational purposes, not financial advice. Everyone should do their own research and consider their risk tolerance before investing.
References
Masnavi, S., 2025. Tom Lee’s Bitmine Aims to Hold 5 % of ETH: ‘Game On,’ Says Lubin, SharpLink's Chairman. CoinDesk. [online] Available at: https://www.coindesk.com
Young, M., 2025. Ethereum Is Becoming What Treasuries Are to Traditional Finance: Research. CryptoPotato. [online] Available at: https://cryptopotato.com
Katte, S., 2025. BitMine Gobbles Over $2 B in ETH in 16 Days Amid Treasury Arms Race. Cointelegraph. [online] Available at: https://cointelegraph.com
Shen, M., 2025. Beyond Stablecoins: The Case for Ethereum. Electric Capital thread on X (Twitter). [online] Available at: https://x.com
Collaborative Report, 2025. The Bull Case for ETH – Digital Oil, Store of Value, and Global Reserve Asset for the Digital Economy. [PDF] Available at: https://ethereum-bullcase.org
Young, M., 2025. Cathie Wood Sells Coinbase Shares for Tom Lee’s ETH Firm. Cointelegraph. [online] Available at: https://cointelegraph.com
Karunanidhi, V., 2025. BlackRock Buys $100 M in ETH as Inflows Hit Record $2.12 B. The Coin Republic. [online] Available at: https://www.coinrepublic.com
Masnavi, S., 2025. Ethereum Treasury Race Heats Up as SharpLink and Bitmine Battle for Dominance. CoinDesk. [online] Available at: https://www.coindesk.com
Conner, E., 2025. “The bull case for ETH is worldwide adoption of stablecoins.” X (Twitter) post, 24 Jul 2025. [online] Available at: https://x.com
Ethereum Foundation, 2025. Strategic Ether Reserves Dataset. [online] Available at: https://ethereum.foundation