Institutional Investor Confidence Driving ETH’s Price Action

This content excerpted from Two Prime Digital Assets’ April 27, 2021 report, “The Rise of Institutional Ethereum Investors,” available for free download here.

One day after Two Prime Digital Assets’ presentation of “The Rise of Institutional Ethereum Investors,” a Reuters story announced that Ethereum hit a record high.

Here we provide some historical context about the milestones leading to this moment, particularly in the light of increased confidence from institutional investors:

 

Institutional Ethereum Timeline

 Based on our analysis of ETH’s price performance, derivatives markets, and on-chain data, we believe that ETH has earned a place, alongside BTC, as an institutional-grade investment, store of value, and treasury reserve asset.

The price of ETH, the digital asset used to interact with Ethereum (a global computer network able to process decentralized data functions), has grown 907% in just the past year — and a stunning 85,587% since its inception in 20151.

In addition to their dominant market capitalizations, what differentiates both ETH and BTC from the thousands of other ‘alt-coins in existence is their liquid spot and derivatives markets. This provides professional asset managers a meaningful way to hedge and manage risk using futures and options strategies. It is perhaps no coincidence that the inflows of institutional capital to both ETH and BTC followed the emergence of more liquid derivatives markets in the second half of 2020.

We believe ETH is steeply undervalued relative to BTC, which began attracting institutional investment in 2020 and has exceeded $1 trillion in market capitalization. On the other hand, ETH began attracting institutional investment in early 2021 and has seen its market capitalization grow to reach $275 billion, still just 25% of BTC.

To learn more about the growing digital assets market and how intelligent investors work with Two Prime, contact us at: [email protected]