EZBC: Bitcoin's Stagnant Utility Remains A Weakness (Rating Downgrade)

Summary Ethereum is now favored over Bitcoin in capital flows, with August showing a dramatic shift in investor preference and net inflows. Bitcoin's on-chain fundamentals are deteriorating, with declining transaction volumes, fees, and transferred value relative to ￰0￱ has overtaken Bitcoin in key usage metrics, signaling a potential top for Bitcoin this cycle and stronger fundamentals for ￰1￱ a significant rally, I am downgrading the Franklin Bitcoin ETF (EZBC) to 'hold,' seeing Ethereum as the better long-term ￰2￱ yet another month in 2025 complete, we grind increasingly closer to decision time for Bitcoin ( BTC-USD ) and Bitcoin ETFs like the Franklin Bitcoin ETF (BATS: EZBC ).

I've covered EZBC for Seeking Alpha in the past and happen to like the fund for its designed purpose; specifically, providing exposure to Bitcoin through what is probably a more familiar financial product for the broader investment ￰3￱ fund functions essentially identically to most of the other Bitcoin ETFs in the US market and offers a competitive ￰4￱ by YCharts To this point, the legitimacy of EZBC as a viable Bitcoin product isn't really the point of this ￰5￱ have seen over the last year that EZBC holds up just as well as the market-leading ETF product and is superior to futures-based alternatives. Rather, in this article we will take an updated look at Bitcoin's capital flow story as well as on-chain metrics through August to determine whether or not network fundamentals are showing any meaningful ￰6￱ Flows Now Favor ETH Of course, on-chain utility is just one part of the ￰7￱ demand for BTC from DATs and ETF investors has been enormous in ￰8￱ it should be noted that investors are now starting to favor ETH over ￰9￱ the change in share of net flow dominance that we just witnessed in August: Asset (mil) MTD Flows YTD Flows AUM Bitcoin -$301 $20,797 $166,721 Ethereum $3,955 $12,086 $37,856 Multi-asset -$4.4 $113 $7,619 Solana ( SOL-USD ) $388.8 $1,240 $3,277 XRP ( XRP-USD ) $307.0 $1,396 $2,659 Total $4,376 $35,527 $219,876 BTC Dominance -6.9% 58.5% 75.8% ETH Dominance 90.4% 34.0% 17.2%) Where ETH net flows were almost at parity with BTC in July, August was decidedly an overweight ETH ￰10￱ is benefiting from both surging acquisitions by investors as well as improved on-chain ￰11￱ to the investment net flow story, Bitcoin's on-chain metrics in August also showed ￰12￱ Chain Metrics Through August Bitcoin DAAs (Token Terminal) Monthly DAAs continue to trend flat-to-down for Bitcoin with 10.8 million active addresses during ￰13￱ was actually up 2.9% year over year but still well below highs from 2021 and ￰14￱ DAAs have largely held up against averages through the first 7 months of 2025, transactions have been falling: Bitcoin Metrics August 2024 July 2025 August 2025 YoY MoM DAAs* 10.5 10.7 10.8 2.9% 0.9% Transactions* 18.5 13 14.1 -23.8% 8.5% Fees* $20.73 $16.42 $13.20 -36.3% -19.6% Avg Tx Fee $1.08 $1.28 $0.96 -11.1% -25.0%) The other thing to consider is dollar-denominated transferred value.

I've stacked ETH vs BTC transferred value shares in the chart ￰15￱ bottoming out at 27% share of transferred value in May, ETH rocketed up to 53% share of transferred value at the end of August. I see two major signals here. First, I believe it is indicative of Ethereum overtaking Bitcoin in an important fundamental metric given the stark differences between the two assets in several other key ￰16￱ second, it could also be seen as an indication that Bitcoin's top is either close or already here for this ￰17￱ the 2017 bull run, ETH's share of transferred value peaked at 50%. In 2021 it hit 58%.

At 53% currently, I think Bitcoiners would be wise to consider the possibility that the gains have been had for ￰18￱ Thoughts There is perhaps an argument to be made that on-chain fundamentals don't really matter; that somehow, Bitcoin is a special asset that simply needs to be held to let supply/demand produce higher prices in ￰19￱ all, a major takeaway from the block size war last decade was that narratives can change and Bitcoin is more 'Digital Gold' than a decentralized 'peer to peer' money ￰20￱ that is true, then capital flows into the asset might really be the only thing that matters. Yet, I have long argued that assertion is ￰21￱ that all of the hoarding through ETFs and/or DATs will ultimately lead to network security issues down the line.

Regardless, I've been willing to look beyond my own opinions of Bitcoin and simply follow the market ￰22￱ the market is singing a different tune ￰23￱ Bitcoin previously dominated all other digital assets through investor net flows, Ethereum is seemingly taken its turn. Importantly, beyond simply benefiting from investment demand, Ethereum has terrific fundamentals as well through usage and stablecoin transfer ￰24￱ is not to say that I'm exiting my Bitcoin position entirely. Frankly, I have Bitcoin that I will likely never ￰25￱ I think Ethereum is the better long term investment at this point in ￰26￱ an 82% rally from my initial coverage, I'm downgrading EZBC to 'hold.'