Ethereum ‘The Most Undervalued Asset in Crypto Finance’ Is Attracting Institutional Interest

In 2020 institutional investors have been rushing in Bitcoin; as a matter of fact, this is what makes this bull run different from the last one. While the 2017 bull run was fueled by retail, this time, it’s the big players that are at the center of the recent rally.

But it is not just for Bitcoin; rather, institutional adoption is spreading beyond the largest cryptocurrency.

If we look at the volume of transactions over $100,000 for Ethereum, they are reaching levels that haven't been seen in over 2 years, noted IntoTheBlock.


As we reported, even Grayscale, which only allows investments from institutional and accredited investors, sees Ethereum's blockchain becoming the most actively used; its token, Ether, is getting more attention as well.

“Over the course of 2020, we are seeing a new group of investors who are Ethereum first and in some cases Ethereum only,” said Michael Sonnenshein, managing director at Grayscale Investments, in an interview with Bloomberg. “There’s a growing conviction around Ethereum as an asset class.”

The Grayscale Ethereum Trust has 30.28 million shares outstanding as of Dec. 8, 2020, compared to 5.2 million at the end of 2019. The product's inflows increased $184 million in 3Q20 from 4Q19, with over 17% of it coming from new institutional investors.

Last month, the average trading volume of ETHE surged by more than 200% to reach a record level compared to the previous month. Just last week, Grayscale announced a 9-for-1 share split for ETHE.

Grayscale’s Ethereum product (ETHE) is trading at a premium of 140% to Ether. Currently trading around $575 with 340% year-to-date performance, ETH is still down 64% from its all-time high of over $1,400.

“The development of the asset class has continued to solidify itself,” Sonnenshein said. “Ethereum has along the same lines of the staying power Bitcoin has.”

Ethereum inflows also stood out in CoinShares at $87.1 million in the week ending Dec. 7. Eth inflows represent 20% of its total inflows, up from 15% share. Increasing investor interest in Ethereum is the result of ETH 2.0, noted the firm’s report.

Ether’s gains also came amidst a boom in decentralized finance. Even the Bitcoin on Ethereum, which is about 0.9% of BTC’s circulating supply, is largely used by whales.

Currently, the DeFi space has nearly $15 billion total value locked. 7 million of ETH is locked in DeFi while over 1.2 million (1.08% of ETH total supply) is locked in ETH 2.0, which Ki Young Ju, CEO of Crypto Quant, says makes it “is the most undervalued asset in crypto finance.”

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