An ‘Extremely Bullish’ Institutional Catalyst for Ethereum is on the Horizon
As Bitcoin enjoys a wild ride to $23,800, Ethereum also managed to make it above $670.
Interestingly for the second-largest cryptocurrency with a market cap of $75 billion, it is still 57% away from its all-time high despite rallying more than 400% in 2020. And now that Bitcoin has hit a new peak, ETH is expected to follow and make it above $1,000.
In line with these gains, the total number of addresses with a balance of ETH surpassed 50 million for the first time, as per IntoTheBlock data. Not only did ETH make a new record, but it is the first crypto-asset to reach this milestone.
Yesterday, as we reported, CME also announced that it would be launching the Ether futures on February 8, 2021.
It is a big deal for the cryptocurrency as CME represents the institutional interest in the digital asset. Although CME’s bitcoin futures launch at the top of the 2017 bull market was taken as a negative sign for the prices, the retracement was expected after the wild rally.
CME’s bitcoin futures just acted as a catalyst for that correction. Now, as we see in 2020, the biggest regulated bitcoin futures market has been recording more than $1 billion in open interest (OI) on bitcoin futures.
Similarly, CME’s Ether futures, where each contract will have 50 units, will bring more institutional support to the digital asset. Trader and economist Alex Kruger said,
“People mostly remember how bitcoin hit its top on 2017 the exact day the CME BTC futures launched, and proceeded to crash right after. They forget that the CME launch drove the price from 6K to 20K, +225% in 2.5 months. The launch of CME ETH futures is extremely bullish.”
Institutions have been exclusively going into Bitcoin as an inflation hedge. Still, Ether is also now making its place among the investment portfolio, emerging as silver to Bitcoin’s gold, in reference to Ray Dalio discussing cryptocurrencies’ future, seeing their categorization as precious commodities and industrial commodities.
Already, Grayscale’s Ethereum product (ETHE) has 2.94 million Ether in its holding. Jake Chervinksy, General Counsel at Compound Finance, said,
“CME launching ETH futures is a big deal. Combined with Grayscale's ETHE's recent growth, this signals rising institutional interest in (& comfort with) ETH. This doesn't happen without significant demand. ETH's market structure is maturing quickly.”
Interestingly, while Grayscale holds over 2.5% of Ethereum supply, another 1.53 million Eth (worth more than $1 billion) is locked in ETH 2.0 deposit contract, and a whopping 7.1 million ETH is locked in DeFi.
Things are about to get interesting for Ethereum as well.