The recent weeks have witnessed a strong bullish drive from institutional investors in the digital assets market, leading to significant increases in various market metrics. Ethereum (ETH), which had been trading sideways for most of the year, experienced a surge above $2,000 following the recent market uptick. This surge has propelled the wider market capitalization to over $1.5 trillion and sparked a positive sentiment among investors.
Institutional investors’ funds in Ethereum products now stand at $10 million year-to-date (YTD), a remarkable turnaround after several weeks of underperformance. The assets under management (AUM) in Ethereum products have also climbed to over $8.8 billion. The CoinShares Weekly assets flows revealed a series of outflows from the altcoin giant in the past few weeks, despite positive developments on the main network.
Ethereum’s Challenging Year
Ethereum faced a challenging year in 2022, along with Bitcoin (BTC), as it endured the impact of Federal Reserve policies, inflation factors, and the collapse of the Terra Network and FTX. These wider economic factors and industry collapses caused Ethereum to plunge by over 55%. The poor performance in 2022 overshadowed the positive developments on the Ethereum network.
However, this year has seen a resurgence of interest from institutional investors in the market. The focus has predominantly been on Bitcoin, driven by the anticipation of a spot ETF approval. Major institutional giants, including BlackRock, have applied for this approval with a strong belief that the Securities and Exchange Commission (SEC) will grant it. As a result, Bitcoin products have experienced inflows of over $1.6 billion YTD, while Ethereum products have struggled with outflows.
Ethereum’s Revival and Growth Potential
An uptick in the performance of ETH at the beginning of this year can be attributed to the network’s Merge, which implemented the Proof-of-Stake consensus mechanism. Wealth managers have shown their confidence in Ethereum, considering it as the crypto asset with the highest growth potential. In the past week alone, Ethereum witnessed inflows of $31 million, marking the fifth consecutive week of inflows totaling $134 million.
While Bitcoin’s run has been fueled by ETF demand, the launch of several future Ethereum products has not driven the expected growth. Nonetheless, at present, ETH is trading above $2,200, and investors are optimistic about its potential for another rally to end the year. Bitcoin has continued to dominate the market in 2022, attracting significant investment funds in anticipation of an ETF approval and a bullish market.
Last week, institutional investors injected $132 million into the market, resulting in a positive momentum that pushed DeFi figures above $46 billion and altcoins to yearly highs.
