Ether (ETH) has lagged behind bitcoin (BTC) in performance this year, but recent shifts in ETF inflows suggest that could soon change, according to a research report by Bernstein.

The report pointed out that Blackrock’s spot ether ETF saw a significant influx of $250 million in funds on Friday, a notable jump compared to the $137 million in inflows to its spot bitcoin ETF. This growing demand for ether is creating favorable supply-demand dynamics, setting the stage for ETH to potentially outperform bitcoin in the near future, the analysts stated.

Additionally, staking yields are expected to provide further momentum for ETH. Bernstein noted that earlier ether ETF applications didn’t include staking yields due to regulatory constraints, but with a potentially more crypto-friendly SEC under the new administration, staking yields are likely to be approved soon. This could drive yields as high as 4-5%, especially with increasing Ethereum blockchain activity.

Ethereum remains the primary platform for asset tokenization and stablecoins, fueling growth in network activity. Since Ethereum’s shift to a proof-of-stake consensus mechanism, the total supply of ether has remained steady at 120 million tokens.

Ethereum stakers currently earn around 3% from transaction fees, which has resulted in 28% of ether being locked in staking contracts, with another 10% in deposit and lending contracts. Furthermore, nearly 60% of ether hasn’t changed hands in the past year, pointing to a resilient and committed investor base. This trend strengthens the positive demand-supply dynamics for ETH, reinforcing its bullish outlook.