Are Institutional Investors Losing Interest in Ethereum?
Ethereum (ETH) has fallen following recent crypto liquidations this week. While most outflows can be attributed to the general market sentiment, institutional funds play a major role in the asset’s wider acceptance.
This year, the United States Securities and Exchange Commission (SEC) approved spot Bitcoin (BTC) ETFs which saw an inflow of traditional investors in the market. Spot ETFs also gave the asset more legitimacy amid initial fears and uncertain regulation.
Spot ETFs rallied the market pushing the price of the asset to an all-time high above $72,000 with bulls making higher projections. These inflows to Bitcoin and crypto assets turned institutional investors to Ethereum.
Reduced Institutional Flows
The clamor for a spot in Ethereum ETF garnered steam this year after multiple filings to the SEC. Institutional investors see the staking feature of Ethereum as a bullish driver for the asset price. Secondly, being the largest smart contract network, on-chain decentralized finance (DeFi) activities will surge the asset’s price.
However, the price of the assets has plummeted in recent weeks and its existing institutional products have seen sharp outflows. On April 15, a report from CoinShares showed a $22 million outflow from Ethereum last week. These flows bring total monthly exits to $51.3 million. However year-to-date flows stand at $23 million.
📉 Last week, investors were hesitant as the positive price momentum stalled. Digital asset investment products experienced minor outflows, totalling US$126m.
Get our insights in our full report as well as more data by region, issuer and asset: https://t.co/dkMoXGWfw1 pic.twitter.com/H5qjaasbuR
— CoinShares (@CoinSharesCo) April 15, 2024
Most commentators suggest that the AUM for Ethereum isn’t moving as fast as Bitcoin last year when the market leader gained ground while anticipating spot ETFs. Bitcoin’s AUM soared with its price in Q4 2023 while Ethereum’s products are at $13.8 billion despite widespread anticipations.
Ethereum Price To Recover?
The price of Ethereum is down due to macroeconomic factors and reduced sentiment but institutional flows have contributed to the status quo. At press time, Ethereum price is at $3,052, a 13% drop this week and 15% this month.
Bulls maintain optimism of a possible run should spot Ethereum ETF get approval in the United States. Similarly, a general market uptrend will boost institutional inflows in Ethereum because of a ripple effect in decentralized finance activities.
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