Ethereum, as an institution-level investment, value store, and treasury reserve asset, has won a position alongside Bitcoin.
Ethereum, the second largest cryptocurrency by market value, has continuously hit record highs these days. The European Investment Bank has released good news for Crypto bonds worth US$121 million, which has increased the demand.
According to a recent report by Two Prime, a Crypto asset investment guidance provider , Ethereum has successfully attracted institutional investors and corporate asset allocation due to its booming development community, fast-growing DeFi ecosystem, and availability of derivatives markets. note.
Two Prime pointed out, “Based on our analysis of ETH price performance, derivatives market and on-chain data, we believe that Ethereum, as an institutional investment, value store, and treasury reserve asset, has won a position alongside Bitcoin. .”
The current price of Ethereum is approximately US$2,900, which has risen by more than 900% in the past year.
Despite this, Two Prime still believes that Ethereum is “severely undervalued” compared to Bitcoin, which has a market value of more than $1 trillion.
On the other hand, Ethereum, which has attracted institutional investment since the beginning of 2021, has grown to a market value of US$275 billion, which is still only 25% of BTC.
Ethereum is an advantageous open source technology development project that has the ability to shape the future of finance. Although Bitcoin is still the most popular crypto investment option, Ethereum is also becoming more and more popular.
Grayscale, the world’s largest crypto asset and cryptocurrency investment management company, owns 3.2 million Ethereum, accounting for about 3% of the total supply. This greatly reduces the total supply of Ethereum in circulation and causes its price to rise. Driving force.
At present, we use “out-of-the-money” (OOTM) put options on the crypto market to hedge long spot positions to analyze, which shows that institutional investors are penetrating the market.
Option trading volume (the number of contracts traded per day) and the option open interest rate (the number of active contracts) have also increased, which further reflects the increasing institutional adoption rate of Ethereum.
Two Prime pointed out that ” the growth of the futures and options market has surpassed pure retail speculative demand, because institutional money management companies have begun to hedge long portfolios of ultra-large volatility events. “
On the other hand, since April 2021, more than 950k of Ethereum has been transferred from world-renowned exchanges.
At the same time, the circulation percentage of Ethereum locked in the DeFi protocol has increased from 8.5% to nearly 10%, which may herald the beginning of a supply shortage , which may manifest itself in the summer of 2021.
The report also pointed out that although the total outstanding interest of Ethereum in April 2020 was only US$365 million, it had increased to more than US$2 billion by April 2021, reaching US$7.5 billion, which shows that the growth rate is unusual.