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Institutional investor opinion toward ETH improves, as merge approaches

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Nonhlanhla P Dube

Professional investors are returning to Ethereum, with ETH-based funds seeing inflows for the third week in a row. Prices for Ether (ETH) fell again on Wednesday, but there are hints that professional investors are warming to the asset as the much-anticipated Merge approaches.

In its weekly analysis of digital asset fund flows, fund manager CoinShares said that Ether-based products received inflows for the third week in a row. Institutional Ether funds received a R128.6 million inflow, while Bitcoin (BTC) funds experienced a R28.7 million outflow.

 “The inflows suggest a modest turnaround in sentiment, having endured 11 consecutive weeks of outflows that brought 2022 outflows to a peak of US$460M.” CoinShares said of the Ether funds. It went on to explain that the change in sentiment could be related to the growing likelihood of the Merge occurring later this year.

The Merge is a much-anticipated Ethereum upgrade that shifts the consensus method from proof-of-work (PoW) to proof-of-stake (PoS) (PoS). It is now preparing for one more test run, and the Merge will be available by the end of October.

During a week that saw record withdrawals of R7 billion, the majority of which came from Bitcoin-based funds, institutional investors began reintroducing capital into Ether-based funds in late June.

There was a total inflow of R247 million during the period, while short Bitcoin funds made up R107 million, indicating that investors were still negative on the king of crypto. Inflows into US funds and exchanges totaled R139 million, with 76 % of them consisting of short positions, a similar percentage to the week ending July 8.

The asset’s current price today does not reflect institutional investors’ increased interest in Ether. According to CoinGecko, ETH is now trading down 2.9 % in the last 24 hours at R17.7K, after losing 28 % in the previous month.

Crypto Twitter has been abuzz with debate over whether Ether should be classified as a security or not, with tribalism rearing its ugly head once more. Bitcoin enthusiasts have sided with MicroStrategy CEO Michael Saylor, who stated last week that ETH was “obviously” a security.

This, however, has been extensively questioned by Ethereum supporters, including co-founder Vitalik Buterin, who weighed in on the debate on Tuesday.

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube
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