Why Ethereum is a growing base for institutional capital

Journalist

Posted: November 28, 2023

• Institutional investors are buying a lot of ETH-related trusts.
• ETH 2.0 seemed to have convinced these players of the project’s long-term potential.

Funds flowing into Ethereum [ETH] trusts and ETFs have been increasing since the 23rd of November, according to data observed by AMBCrypto. At press time, the Ethereum Funds Holdings, provided by CryptoQuant, had increased to 3.17 million.

The increase in metric is a testament to the increasing demand by institutions for investments linked to the altcoin.  

Source: CryptQuant

Big players love the ETH play

Woominkyu, a verified author on CryptoQuant Woominkyu also corroborated AMBCrypto’s examination of the market sentiment.

However, Woominkyu went deep by looking at the effect of the inflow on ETH’s price action. The analyst, after checking the impact, noted that:

“This surge, occurring as Ethereum’s price stabilizes between 1.8K and 1.9K USD, signals a growing interest from institutional investors. It reflects their strong belief in Ethereum’s long-term value and the market’s potential for growth.”

Furthermore, the long-term bullish sentiment could also be linked to the optimism around a potential spot ETF approval. But besides that, there were other reasons. In fact, some were linked to the changes the blockchain made over the last year.

Top of the list is Ethereum’s transition to Proof-of-Stake (PoS), popularly called the Merge. Consensys, in a blog post last year, envisioned the possible impact of the Merge on institutional inflow.

One of these includes improved security, meaning that institutional investors now have more confidence in the protocols’ ability to secure their funds. 

Another factor talked about is the deflationary supply. The deflationary supply reduces the rise of seeing ETH go to zero. With respect to this, the Ethereum-powered software company mentioned:

“For institutions, ETH may become a more attractive asset, as reduced supply may lead to an increase in value.”

Belief is back

The Shapella upgrade, activated in April, also contributed to the faith these large investors have in Ethereum. The Total Value Locked (TVL) of Ethereum also aligned with the notion that more participants now trust the blockchain compared to 2022.

At press time, Ethereum’s TVL was $26.02 billion.

Source: DefiLlama

The TVL value mentioned represented a 19.31% increase in the last 30 days. Should the metric continue to increase, then both retail and institutions will look towards buying the coin for potential long-term gains.

A close look at the Long-Term Holder Net Unrealized Profit and Loss (LTH-NUPL) showed that the market mood has moved from hope (orange) to optimism (yellow).  The LTH-NUPL serves as an indicator to assess the behavior of long-term holders.

Source: Glassnode

Read Ethereum’s [ETH] Price Prediction 2023-2024

So, this movement means holders of the altcoin are no longer fearful. Rather, most now have the belief that ETH has great future potential. 

If the ETH price moves past $2,000 in the coming weeks, then the LTH-NUPL will switch to the belief stage. At this point, a lot of accumulation may occur that could send ETH into an extended rally.

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Journalist

Posted: November 28, 2023

• Institutional investors are buying a lot of ETH-related trusts.
• ETH 2.0 seemed to have convinced these players of the project’s long-term potential.

Funds flowing into Ethereum [ETH] trusts and ETFs have been increasing since the 23rd of November, according to data observed by AMBCrypto. At press time, the Ethereum Funds Holdings, provided by CryptoQuant, had increased to 3.17 million.

The increase in metric is a testament to the increasing demand by institutions for investments linked to the altcoin.  

Source: CryptQuant

Big players love the ETH play

Woominkyu, a verified author on CryptoQuant Woominkyu also corroborated AMBCrypto’s examination of the market sentiment.

However, Woominkyu went deep by looking at the effect of the inflow on ETH’s price action. The analyst, after checking the impact, noted that:

“This surge, occurring as Ethereum’s price stabilizes between 1.8K and 1.9K USD, signals a growing interest from institutional investors. It reflects their strong belief in Ethereum’s long-term value and the market’s potential for growth.”

Furthermore, the long-term bullish sentiment could also be linked to the optimism around a potential spot ETF approval. But besides that, there were other reasons. In fact, some were linked to the changes the blockchain made over the last year.

Top of the list is Ethereum’s transition to Proof-of-Stake (PoS), popularly called the Merge. Consensys, in a blog post last year, envisioned the possible impact of the Merge on institutional inflow.

One of these includes improved security, meaning that institutional investors now have more confidence in the protocols’ ability to secure their funds. 

Another factor talked about is the deflationary supply. The deflationary supply reduces the rise of seeing ETH go to zero. With respect to this, the Ethereum-powered software company mentioned:

“For institutions, ETH may become a more attractive asset, as reduced supply may lead to an increase in value.”

Belief is back

The Shapella upgrade, activated in April, also contributed to the faith these large investors have in Ethereum. The Total Value Locked (TVL) of Ethereum also aligned with the notion that more participants now trust the blockchain compared to 2022.

At press time, Ethereum’s TVL was $26.02 billion.

Source: DefiLlama

The TVL value mentioned represented a 19.31% increase in the last 30 days. Should the metric continue to increase, then both retail and institutions will look towards buying the coin for potential long-term gains.

A close look at the Long-Term Holder Net Unrealized Profit and Loss (LTH-NUPL) showed that the market mood has moved from hope (orange) to optimism (yellow).  The LTH-NUPL serves as an indicator to assess the behavior of long-term holders.

Source: Glassnode

Read Ethereum’s [ETH] Price Prediction 2023-2024

So, this movement means holders of the altcoin are no longer fearful. Rather, most now have the belief that ETH has great future potential. 

If the ETH price moves past $2,000 in the coming weeks, then the LTH-NUPL will switch to the belief stage. At this point, a lot of accumulation may occur that could send ETH into an extended rally.