Institutional Investors Are Behind Ethereum’s Surge Above $4,000: Analyst

Institutional Investors Are Behind Ethereum’s Surge Above $4,000: Analyst

Ethereum continues to steal the show from the larger-cap alternative coins with consecutive all-time highs – the latest one took the asset above $4,000. While many speculate on the possible reasons behind ETH’s performance, on-chain data suggests institutional investors are to blame.

Institutions Behind ETH’s Surge?

Ever since the start of the year when ETH traded at around $780, it has been in a league of its own. Apart from massively outperforming bitcoin and taking a sizeable share of its market dominance, ether has charted new records against the dollar quite frequently.

In the past week alone, the cryptocurrency firstly broke above $3,000, which was a notable milestone of its own. However, it kept climbing further and conquered $4,000 just hours ago. As reported earlier, the current record stands at around $4,150. In other words, ETH is roughly 430% up since January 1st, 2021.

CryptoQuant’s CEO, Ki Young Ju, outlined a “significant premium” on Coinbase, which, he believes, is among the most probable reasons behind Ethereum’s price surge.

Institutional investors, especially those based in the US, typically do their crypto shopping on the largest local exchange. The emergence of a high premium on Coinbase compared to other exchanges indicates a “strong spot buying pressure” on the US trading venue.

Consequently, Ju answered the question “what’s behind this ETH parabolic move” with “US (institutional) investors.” Additionally, he advised investors to follow such investors instead of going against them.

ETH's Price Surge and Coinbase Premium. Source: CryptoQuant
ETH’s Price Surge and Coinbase Premium. Source: CryptoQuant

Or Maybe a Combo of Factors

Looking a bit deeper into the developments around Ethereum and its native cryptocurrency, one can find several factors going their way. From stablecoins running on top of it to countless DeFi and NFT projects – the Ethereum network is arguably the most utilized in the entire cryptocurrency space.

Despite the issues it causes on the blockchain, this high usage has caught the attention of various types of investors. Aside from institutions, retail has also come on board. Glassnode data suggests that the number of non-zero wallets has grown to a new ATH level of nearly 60 million.

Non-Zero ETH Addresses. Source: Glassnode
Non-Zero ETH Addresses. Source: Glassnode

The analytics company exemplified the current supply dynamics. After categorizing it as a “compelling story,” Glassnode said the ETH on exchanges is just 12%, while the percentage of coins used in smart contracts is almost 23%.

ETH on Exchanges vs. ETH in Smart Contracts. Source: Glassnode
ETH on Exchanges vs. ETH in Smart Contracts. Source: Glassnode

Furthermore, VanEck also wants to take advantage of the ongoing craze and filed for an Ethereum ETF with the SEC last week. This came after numerous ETH ETPs in Europe.

editorial staff

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