Institutional investors pile into ETH-based digital asset funds

09 Aug 2022

Ether-based digital asset funds have registered seven consecutive weeks of positive inflows, according to CoinShares data.

Last week the inflows hit $16.3 million, adding to a total of $159 million over the past seven weeks.

According to Head of Research at CoinShares, James Butterfill, the boost to market sentiment for Ethereum-focused products is predominantly down to “greater clarity” regarding the forthcoming merge, due on 19th September.

Butterfill added: “We believe this turn-around in investor sentiment is due to greater clarity on the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake.”

The Merge will see the Ethereum Mainnet merge with the Ethereum 2.0 Beacon Chain, Cointelegraph reports. This will complete the move from proof-of-work (POW) to a proof-of-stake (POS) consensus mechanism. This will bolster Ethereum’s security and energy efficiency.

Cryptocurrency traders are preparing to “buy the rumour, and sell the news,” in regard to The Merge. “Derivatives traders are placing directionally obvious bets for Ethereum, specifically relating to the upcoming Merge planned on 19 September,” said Blockchain analytics firm Glassnode.

As part of the “Betting on the Merge” newsletter published this week, Glassnode said that after The Merge, the ETH options and futures market is positioned in “backwardation,” meaning an asset’s current price is higher than those trading in the futures market.
“Both futures and options markets are in backwardation after September, suggesting traders are expecting the Merge to be a 'buy the rumour, sell the news' style event, and have positioned accordingly," the firm added.
Vitalik Buterin – the founder of Ethereum – is upbeat about EHT’s prospects over the long-term: “Once the merge actually happens then I expect morale is going to go way up. I basically expect that the merge is going to be not priced in, by which I mean not even just market terms, but even psychological and narrative terms. In narrative terms, I think it’s not going to be priced in pretty much until after it happens.”