Ethereum (ETH) records institutional inflows for 7th consecutive week, derivative trades turn bullish

  • Last week, institutional inflows in Ethereum investment products stood at $16.3 million.
  • ETH derivative traders have turned bullish with call options for ETH clearly dwarfing the put options.

Ethereum has taken the center stage currently in the crypto space as The Merge upgrade nears just one month from here. Institutional investors have been piling their bets on Ethereum investment products for the seventh consecutive week.

As per the report from CoinShares, Ethereum saw institutional inflows of $16.3 million last week. Over the last seven weeks, the net inflows coming to Ethereum have totaled more than $159 million. In a report on Monday, August 8, James Butterfield, Head of Research at CoinShares noted:

Ethereum saw inflows totalling US$16m and is enjoying a near 7 consecutive week run of inflows totalling US$159m. We believe this turn-around in investor sentiment is due to greater clarity on the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake.

During The Merge scheduled on September 19 next month, the Ethereum mainnet will merge with the Ethereum 2.0 Beacon Chain. Thus, it will complete the transition from proof-of-work (POW) to a proof-of-stake (POS) consensus mechanism.

The Proof-of-Stake (PoS) Ethereum 2.0 will come with higher network efficiency, and security, and will also be very much environmentally friendly.

Later this week, the Merge upgrade shall go lie on the Goerli and Prater testnet. This will also be the last scheduled dress rehearsal before implementing The Merge upgrade on the Ethereum mainnet.

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Ethereum derivative trader gearing up

Ethereum had a strong rally last month of July after a dismal performance in the second quarter. As of press time, ETH is trading at a price of $1,771 with a market cap of $215 billion. Crypto billionaire and Galaxy Digital founder Mike Novogratz said that he expects the ETH price to go to $2,200 and above riding further on the recent momentum ahead of its much-awaited software upgrade.

At the same time, blockchain analytics firm Glassnode notes that as the Merge upgrade approaches closer, crypto traders have been gearing up to “buy the rumor, and sell the news”. In its latest weekly report, Glassnode wrote:

Derivatives traders are placing directionally obvious bets for Ethereum, specifically relating to the upcoming Merge planned on 19 September. For the first time in history, Ethereum options open interest at $6.6B is now higher than for Bitcoin at $4.8B. Whilst not an all-time-high yet, ETH options OI is close to setting a new one.

Taking a look at the September contracts on Deribit, the call options clearly dwarf the put options. Traders are significantly betting on the ETH price action up to $2,200. There’s also a significant open interest out for $5,000.

Recently, Ethereum co-founder Vitalik Buterin said that the Merge upgrade isn’t priced in. “Once the merge actually happens then I expect morale is going to go way up. I basically expect that the merge is going to be not priced in, by which I mean not even just market terms, but even psychological and narrative terms. In narrative terms, I think it’s not going to be priced in pretty much until after it happens,” he said.

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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