As Ethereum approaches close to The Merge, institutional investors’ interest grows

  • After strong outflows earlier this year from Ethereum, institutional investors have turned net buyers over the last three weeks.
  • A fresh debate on whether Ethereum (ETH) is a security or not has sparked with co-founder Vitalik Buterin sharing his opinion.

Ethereum investment products saw inflows for the third consecutive week in a row. Thanks to the ongoing developments taking place with respect to the Proof-of-Stake (PoS) transition.

The world’s second-largest cryptocurrency Ethereum (ETH) has faced severe price correction this year. Since the beginning of 2022, the ETH price has corrected by over 70 percent. Currently, ETH is trading close to $1,000 with a market cap of $128 billion.

The good news is that institutional interest in Ethereum has been growing off-lately as Ethereum developers continue to make progress with Ethereum 2.0 transition. Earlier this month, Ethereum developers successfully launched The Merge upgrade on the Sepolia testnet. This brings us closer to the launch of The Merge upgrade on the Ethereum mainnet.

Last week, Ethereum products saw net inflows at USD 7.6 million. The fresh set of inflows arrives after major profit-booking earlier this year. As reported by fund manager CoinShares:

The inflows suggest a modest turn-around in sentiment having endured 11 consecutive weeks of outflows that brought 2022 outflows to a peak of US$460m. This improvement in sentiment may be due to the increasing probability of the Merge, where Ethereum moves from proof-of-work to proof-of-stake, happening later this year.

With institutional inflows rising in Ethereum, does it mean that ETH has formed the bottom? Well, CoinShares CSO Meltem Demirors recently said that she expects more pain in the broader economy and also in crypto.

Read More: Bitcoin and crypto bear market isn’t over, more pain left ahead says CoinShares CSO

Even at $1,000, ETH has been facing some selling pressure and some analysts are expecting that ETH can correct further up to $600.

Is Ethereum (ETH) a security?

A new debate has erupted among Bitcoin maxis and Ethereum supporters on whether Ether (ETH) is a security or not. During his interview with Altcoin Daily earlier this week, Bitcoin evangelist Michael Saylor shared his opinion on Ether. He said:

I think Ethereum is a security, I think it’s pretty obvious, […] it was issued by an ICO, theres a management team, there was a pre-mine, there’s a hard fork, there’s continual hard forks, there’s a difficulty bomb that keeps getting pushed back.

Since then, Bitcoin maxis have been throwing their weight behind Saylor. On Tuesday, July 12, Swan Bitcoin’s managing editor Nick Payton said: “Dear Proof of Stakers, The fact that you can vote on something to change its properties is proof that it’s a security. Love, Bitcoin.”

Ethereum co-founder Vitalik Buterin was quick to respond to this. Buterin tweeted: “It’s amazing how some PoW proponents just keep repeating the unmitigated bare-faced lie that PoS includes voting on protocol parameters (it doesn’t, just like PoW doesn’t) and this so often just goes unchallenged. Nodes reject invalid blocks, in PoS and in PoW. It’s not hard”.

Coming back to the Ether price, some analysts believe that this could be a good time for accumulation, especially for long-term holders. But for ETH to swing, either way, a lot depends on the success of the Ethereum 2.0 transition.

About Author

Bhushan is a FinTech enthusiast and holds a good flair for understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In his free time, he reads thriller fictions novels and sometimes explores his culinary skills.

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