The cryptocurrency landscape has exhibited remarkable dynamism, featuring an influx of new digital assets that have garnered varying degrees of attention. Among these, Ethereum (ETH) stands out as having the largest number of long-term holders; however, there is a noticeable decrease in institutional interest in this particular cryptocurrency. According to data from CoinShares, ETH experienced outflows amounting to $4.8 million over the past week, contributing to a total of $108 million in sales for the year.
James Butterfill, Head of Research at CoinShares, pointed out that Ethereum has witnessed the most substantial selling activity compared to other prominent cryptocurrencies. He characterized it as the “least preferred digital asset” among investors in exchange-traded products (ETPs).
As depicted in the illustration, Bitcoin (BTC) emerged as the cryptocurrency facing the greatest challenges in the past week. The flagship cryptocurrency saw substantial sales by significant entities, amounting to approximately $69 million in value. However, when looking at yearly transactions, BTC attracted inflows of $200 million, while Ethereum recorded outflows totaling $108 million.
Ethereum’s Investor Exodus: A Closer Look at the Reasons
In contrast to Ethereum, Bitcoin has undergone considerably more substantial growth. In terms of price performance, ETH experienced an 8% decrease over the past year, despite the highly anticipated Merge launch that took place about a year ago. Conversely, Bitcoin has enjoyed an impressive 18.2% increase during the same period. Consequently, the current asset price has put 60% of Bitcoin holders in a profitable position, while only 49% of ETH holders are currently experiencing gains, leaving the remaining 48% with losses.
Furthermore, Ethereum’s current MVRV (Market Value to Realized Value) ratio stands at 1.02. This indicates that ETH’s market capitalization exceeds its realized capitalization by 2%. While this suggests a potential overvaluation, it falls within a borderline range, and it’s not a significant deviation to definitively claim that the asset is overvalued.
Notably, Cathie Wood’s ARK Invest has recently submitted an application for an Ethereum exchange-traded fund (ETF). Similar to the case of Bitcoin, if an ETF for ETH receives approval, it could have the potential to reshape the future of the cryptocurrency. Such approval could reignite institutional interest in Ethereum.