Why are more and more institutional investors betting on ETH?

Ether has earned a place alongside Bitcoin as an institutional-grade investment, store of value, and treasury reserve asset.

Ether has earned a place alongside Bitcoin as an institutional-grade investment, store of value, and treasury reserve asset.

Ether, the second largest cryptocurrency by market capitalization, continues to hit record highs these days, and the European Investment Bank released favorable news about $121 million worth of digital bonds, adding to the firestorm of demand.

According to a recent report from digital asset investment guidance provider Two Prime, Ether has managed to attract the attention of institutional investors and corporate asset allocations thanks to a thriving development community, a fast-growing DeFi ecosystem, and the availability of a derivatives market.

Two Prime noted, “Based on our analysis of ETH price performance, the derivatives market and on-chain data, we believe Ether has earned a place alongside Bitcoin as an institutional-grade investment, store of value and treasury reserve asset.”

Ether is currently trading at around $3,200, up over 900% in the past year.

Why are more and more institutional investors betting on ETH?

Why More Institutional Investors Are Betting on ETH

Despite this, Two Prime still believes that Ether is “severely undervalued” compared to Bitcoin, which has a market cap of more than $1 trillion.

On the other hand, Ether, which has been attracting institutional investment since early 2021, has grown to a market cap of $275 billion, which is still only 25% of BTC’s.

Ether is an advantageous open source technology development project that has the ability to shape the future of finance, and while Bitcoin remains the most popular crypto investment option, Ether is becoming increasingly popular.

Grayscale, the world’s largest crypto asset and cryptocurrency investment manager, owns 3.2 million Ether, or about 3% of the total supply, which significantly reduces the total supply of Ether in circulation and contributes to its price increase.

Why more and more institutional investors are betting on ETH?

Why are more and more institutional investors betting on ETH?

Currently, we are analyzing the “out-of-the-money” (OOTM) put options hedging long spot positions in the crypto market to show that institutional investors are penetrating the market.

Options trading volume (number of contracts traded per day) and options open interest rates (number of active contracts) have also increased, further reflecting the growing institutional adoption of Ether.

Two Prime notes that “the growth of the futures and options markets has outpaced purely retail speculative demand as institutional money managers have begun to hedge long portfolios for ultra-large volatility events.”

On the other hand, more than 950k of Ether has moved from prominent global exchanges since April 2021.

Meanwhile, the percentage of Ether in circulation now locked in the DeFi protocol has increased from 8.5% to nearly 10%, which could herald the beginning of a supply shortage that could manifest itself in the summer of 2021.

The report also notes that while the total outstanding interest in Ether was only $365 million in April 2020, it has increased to more than $2 billion to $7.5 billion by April 2021, showing an unusual rate of growth.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/why-are-more-and-more-institutional-investors-betting-on-eth/
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