- Institutional investors offload $108 million of Ethereum in 2023, marking it as the “least loved digital asset.”
- Ethereum ETF by Ark Invest could shift the current sentiment, amidst Ethereum’s current struggles.
A Paradigm Shift: Ethereum’s Institutional Exodus
2023 has not been kind to Ethereum from an institutional perspective. As unveiled by CoinShares’ latest insights, a whopping $108 million worth of Ethereum has been offloaded, pushing Ethereum to the unsavory title of the “least loved digital asset” for this year. James Butterfill, the thinktank behind CoinShares’ research, presents these findings in stark contrast to the runner-up, Tron, which trails Ethereum by over $50 million in institutional offloads.
Unprecedented Moves on the Horizon
While Ethereum’s current position seems precarious, the winds might change direction. The investment juggernaut, Ark Invest, led by the prominent Cathie Wood, recently applied for the inaugural Ethereum ETF in the United States. This initiative is groundbreaking, especially amidst Ethereum’s inflationary shift and dwindling on-chain activity due to the ongoing bear market.
The Broader Crypto Dilemma
Ethereum‘s challenges aren’t in isolation. CoinShares pinpoints a prevalent sentiment of wariness among institutions towards cryptocurrency. Their recent report reveals a continued trend of selling for the fourth week, aggregating to a staggering outflow of $59 million just this past week. These outflows, which total to $294 million, equate to about 0.9% of the total assets under management (AUM). This exit strategy prominently features North American players, with the U.S. and Canada leading the sell-offs.
Butterfill attributes this rampant selling phenomenon largely to the U.S. dollar’s resilience. The currency has been showcasing strength, riding on the market’s perception of a “soft landing scenario.” Yet, Butterfill anticipates a reality check by year-end, especially if high-interest rates come into play.
Trading volumes have suffered a considerable dip, as highlighted by the recent CoinShares report. Butterfill termed the volumes as “super low,” with the past month’s average daily volume being $2.3 billion, a significant drop from the $7 billion yearly average.
Drawing a parallel to the current sentiment, Butterfill identified similarities to the scenario leading up to the last two Bitcoin halvings, suggesting an “apathetic investor” behavior.
In the same vein, Bitcoin experienced a major setback last week. Large entities divested $69 million of the asset. There’s a growing sense of caution and a wait-and-see approach, especially with looming decisions on interest rates by the Federal Reserve. The subsequent performance of the dollar could dictate the crypto market’s direction, and as Butterfill indicates, the impending Consumer Price Index (CPI) and other external factors could play crucial roles in future market dynamics.
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