According to a market maker, institutional investors are betting on Ethereum ($ETH) as its price rises
Cumberland, a cryptocurrency market maker, reported that institutional investors are betting on Ethereum ($ETH), the second-largest cryptocurrency by market capitalization when the cryptocurrency’s price has been outperforming the market.
According to a Twitter thread credited to the head of trading at Cumberland, Johan Van Bourg, the cryptocurrency’s rise remains intact despite a recent fall in the price of Ethereum. According to Cumberland, whereas ETH’s price behaviour in the recent past was technical and heavily macro-correlated, its latest movement has been “crypto-fundamental.”
The market maker said that the Sepolia testnet successfully merged to Proof-of-Stake on July 6, paving the way for a “mainnet merge in early fall.” The Ethereum Merge outlines the network’s existing mainnet combined with the Beacon Chain’s Proof-of-Stake (PoS) mechanism, paving the way for future scaling enhancements, such as sharding. The change is anticipated to lower Ethereum’s energy usage by 99.95 percent.
Tim Beiko, an Ethereum protocol support engineer at the Ethereum Foundation, predicted on a PoS Implementers Call that the Merge would occur in September. Beiko has observed that the timing for Merge is likely to evolve.
Cumberland added that, barring technical issues, the “appearance of a yield-bearing, deflationary, mega-cap asset is a pretty huge event” and that Ethereum’s action “matters to those who worry about climate change.”
According to the company, Ethereum portfolio allocations are “barely overcrowded”, and “it doesn’t take much flow to change the needle.” This movement, it continued, is visible at its over-the-counter (OTC) trading desk, where buy-to-sell ratios are skewed in the long direction.
Moreover, portfolio allocation to ETH is now just marginally overcrowded, so it does not take much flow to tip the needle. We’re seeing this via our OTC desk and API: buy/sell ratios have skewed long over the last week, and institutional buyers have dominated.
The market maker said that the move reflects the fact that it’s “always simpler to purchase a bounce than to catch a falling knife” and that volatility is “not without merit” since Ethereum is a global computer and settlement layer “with huge promise.”
Cumberland’s remarks come at a time when Ethereum whales have been acquiring more of the cryptocurrency as its price has soared over the previous week, partly because of the anticipated date of the blockchain’s Merge.
According to statistics from CryptoCompare, the price of Ethereum has increased by more than 50 percent over the last 30 days, outperforming the leading cryptocurrency Bitcoin, which increased by almost 16 percent.