As you know, the crypto money market has been on its way with fluctuating prices lately. While many crypto analysts have focused on Bitcoin (BTC) and altcoin projects, institutional money has taken action for the leading altcoin Ethereum (ETH)! However, the giant finance company Motley Fool explained the reason for the institutional interest in Ethereum! Here are the details…
Experts explained: Institutional money headed for the leading altcoin Ethereum (ETH)!
Institutional interest in crypto has been growing over the past few years. Unlike the more common retail investor, institutional investors such as hedge funds and investment firms are often seen as capital-laden and catalysts for increasing mainstream adoption of cryptocurrencies. Currently, institutional adoption and interest in Ethereum lags behind that of the leading cryptocurrency, Bitcoin. But this may be on the verge of changing, thanks to a recent update to the leading altcoin project Ethereum, according to experts.
To better understand how institutional interest could evolve, experts point to September 2022, when Ethereum announced one of the most influential and important updates in the history of cryptocurrencies. Known as The Merge, this update has moved Ethereum from a cumbersome and voracious energy-consuming proof-of-work methodology to a more streamlined and energy-efficient proof-of-stake methodology. With the move to proof-of-stake, instead of miners securing the network, Ethereum holders were able to profit by staking their holdings. However, there was a problem: those who chose to stake their funds could not withdraw them. Ethereum developers did this to ensure that there was no mass migration when The Merge went live.
However, that changed with the Shanghai upgrade launched on April 12. Now those who decide to invest will be able to withdraw their funds if they wish. While the Shanghai launch has led to a surge in Ethereum’s price over the past few weeks, it points to a potentially more lucrative future, experts say.
Ethereum (ETH), 3-month price chartInstantly, the leading altcoin Ethereum is trading at $1,931.05 and has a market cap of $232 billion.
Ethereum (ETH) presents a new opportunity for institutional investors!
Prior to the Shanghai update, most institutional investors held their Ethereum and were not staking. When it comes to large amounts of capital, institutional investors stayed away because of the risk of not being able to withdraw. However, with the arrival of Shanghai, new access to liquidity was provided. As a result, optimism is growing that Ethereum could attract capital-heavy institutional investors looking to earn interest on Ethereum assets and implement new trading strategies.
Crypto analysts believe that with staking looking more attractive, hedge funds can now use a method that allows them to profit by investing that even if they are shorting Ethereum, its price will fall. By allowing stake withdrawals, institutions could theoretically short-sell Ethereum and still get returns on their staked assets. Looking at retail investors, experts think institutional adoption should be welcomed. The reason for this is explained as it may lead to more demand and therefore higher prices. While price increase is definitely a priority, experts say, other dynamics are also noteworthy.
Progress continues on the Ethereum network
The health of the Ethereum network could improve if institutional investors decide to stake their funds. Simply put, the more stakers there are, the more secure and decentralized the network becomes. Currently, the percentage of Ethereum staked relative to the total supply lags behind other major proof-of-stake blockchains. Today, this rate is just under 15 percent, while other blockchains average around 60 percent. According to experts, this number is likely to increase in the coming years, with increasing institutional and even retail interest in staking.
According to experts, it is becoming increasingly difficult not to be bullish on Ethereum as developers continue to deliver effective and necessary updates in a timely manner that prioritizes the long-term success of the blockchain. As experts interpret the current trajectory, they expect the percentage of Ethereum staked to increase further, which will not only lead to a healthier network, but may also result in an influx of institutional investors with deep pockets. With that proven, Ethereum’s best days are likely ahead, according to experts. Ethereum price is still 60 percent further from the ATH level and this could turn into an opportunity for ETH investors.
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