The recent surge in digital assets to levels not seen in months is largely attributed to the bullish drive of institutional investors, evident in various market metrics.
Ethereum (ETH), which had traded relatively flat for most of the year, experienced a significant upswing, breaking above the $2,000 mark in response to the recent market uptrend. This surge has propelled the overall market capitalization beyond $1.5 trillion, sparking a wave of bullish sentiments.
As of the current moment, institutional investors have redirected their funds into Ethereum products, reaching $10 million year-to-date (YTD). This marks a notable turnaround after several weeks of relative quiet, and the assets under management (AUM) for Ethereum have now surpassed $8.8 billion.
Interestingly, the CoinShares Weekly assets flows data has indicated outflows from the altcoin giant for several weeks, despite positive developments recorded on the main Ethereum network. This divergence between market trends and asset flows suggests a complex and dynamic landscape influenced by various factors.
Many analysts attribute Ethereum’s challenging performance to the significant downturn experienced last year, influenced by broader economic factors and industry collapses. In 2022, ETH faced a steep decline of over 55%, mirroring the trend seen in Bitcoin (BTC). This decline was attributed to various factors, including Federal Reserve policies, inflation concerns, and the collapse of the Terra Network and FTX, which collectively contributed to a market downturn.
The current year witnessed a resurgence of institutional investors in the market, but the bulk of this growth was concentrated around Bitcoin. The anticipation of a spot ETF intensified, especially after notable institutional giants like BlackRock applied, instilling strong optimism that the Securities and Exchange Commission (SEC) would approve the filing.
Consequently, Bitcoin products experienced consistent inflows over several weeks, amounting to over $1.6 billion year-to-date (YTD). In contrast, Ethereum products faced challenges, with several weeks of outflows leading to net inflows of $10 million YTD. This divergence underscores the varying levels of institutional interest and confidence in different digital assets within the cryptocurrency market.
Ethereum leads altcoin gains
Analysts have attributed the early-year upswing in the performance of Ethereum (ETH) to the network’s Merge, marking its transition to a Proof-of-Stake consensus mechanism. A recent survey revealed that a majority of wealth managers favor ETH as the cryptocurrency with the highest growth potential.
In the past week, Ethereum witnessed inflows amounting to $31 million, extending a streak of five consecutive weeks with a total of $134 million in inflows. This outshone Solana (SOL), which had been considered an altcoin favorite and had seen weeks of consecutive inflows.
While the demand for ETFs fueled Bitcoin’s surge, the launch of several Ethereum futures failed to drive the anticipated growth, as predicted by many experts. As of the current moment, ETH is trading above $2,200, with bullish sentiments aiming for another year-end rally.
Bitcoin has continued to be a driving force in the market throughout the year, witnessing a surge in investment fund figures amid anticipation of an ETF approval and a bullish run. In the past week alone, institutional investors injected $132 million, sparking positive momentum that propelled DeFi figures above $46 billion and led altcoins to achieve yearly highs.
