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Institutional investors are beginning to take more interest in Ethereum. This is very similar to the way they adopted Bitcoin enmasse in 2020.
Bitcoin is not the only crypto asset that has seen an increase in the numbers of its institutional investors. According to a recent report from Coinbase, Ethereum, the second-largest crypto asset, has also seen a rise in the numbers of its institutional investors.
The Coinbase report made it known that the entrance of these major investors into the ETH field played a role in driving the price of the asset into a new all-time high. It was highlighted that these investors now see the token as a store of value. The crypto exchange firm added that it saw that a number of its institutional clients who were hitherto buying Bitcoin were beginning to take positions in this token too.
It was also stated that the institutions were trying to take advantage of the strong returns being generated from Ethereum. The ability of the asset to also power transactions on its network has played a major role in its adoption by these investors.
Analysts have continued to point out that crypto exchange industry leaders like Gemini and Coinbase have had a continued bullish view of the asset. They also point out to the fact that decentralized finance (DeFi) has seen more investors in recent times. DeFi has recorded a massive growth in the last one year with the sector growing to have over $20 billion in its total value locked.
Arthur Cheong, the founder of DeFiance Capital, a DeFi based fund, said that adventurous institutions are beginning to explore Ethereum and DeFi after they have finished exploring Bitcoin. Another top market player, Denis Vinokourov of Bequant believes that this recent inquisition into ETH by investors could be an attempt to get exposure to DeFi protocols.
Vinokourov added that while everyone might not be comfortable with the level of risks associated with DeFi, the projects in this space however boosts activities on the Ethereum network which in turn supports capital appreciation.
To further buttress the point that there is a growing interest of institutional investors in Ethereum, it would be recalled that CME Group announced that it would be launching an Ether based futures contract in the first quarter of this year.
This new development by the biggest Bitcoin Futures Exchange firm in the world would further give institutional investors an opportunity to hedge against the overall risks that comes with investing in Ether and at the same time, provide them an opportunity to take a speculative position.
Bitcoin Witnesses Massive Adoption by Institutional Investors
The leading crypto asset saw massive adoption by institutional investors in 2020. During the said year, investors like PayPal, Square, MicroStrategy and a host of others bought the crypto asset as a viable means of investment to protect them against inflation.
This played a pivotal role in the bull run the asset witnessed towards the end of the year and into the early period of this year. Many analysts have also hailed the asset as the new digital gold that should be added to investors’ portfolios.