An interesting observation was put forward by Quantum Economics’ Mati Greenspan yesterday. The popular analyst observed that after Bitcoin touched its latest ATH at $42,000, Ethereum registered three new ones in the same timeframe.
Albeit the press time corrections, Ethereum has been performing really well in 2021. With its valuation continuing to consolidate near its all-time high, an influx of capital has been seen too. But, are these ‘big investors’ institutional?
Ethereum’s Realized Cap relishing new highs
After the market cap of Ethereum breached the $140 billion-mark in 2021, a recent CoinMetrics report went on to reveal that Ether’s realized market cap registered a new all-time high on the charts too.
Realized capitalization is valued by calculating each unit of supply individually at the price it was last transacted on-chain. Hence, a rise in the realized cap means capital inflows are taking precedence as old coins are increasingly moving on-chain.
Additionally, the number of addresses holding over 10k ETH has also spiked since the beginning of January. The report said,
“There are now 1,241 addresses that hold at least 10K ETH, up from 1,178 on January 1st. These large addresses, each holding roughly at least $14M, potentially signal that institutional investors are starting to buy ETH.”
While high capital inflows are undeniable, putting a tick on the question of institutional involvement is still debatable.
Grayscale ETHE isn’t doing well this bull run
ETH breaking out vs BTC … pic.twitter.com/MzO9Vvd8dE
— skew (@skewdotcom) January 25, 2021
On 25 January, Ethereum registered its most dominant rise in comparison to Bitcoin since last year, a development that is a testament to its performance over the present bull run.
However, speculators rushing to give institutions credit for the current rise still need to be questioned. Take Grayscale’s ETHE, for example.
As can be observed from the attached chart, the discrepancy between Ether’s price and the market premium for ETHE is day and night. ETHE premiums have been accruing minimum rates since the month of January began, a finding that directly suggests that institutional interest is not picking up with as much pace as expected.
In fact, reports have also found that over the past 30 days, Grayscale’s Ethereum Trust product is one of the market’s most underperforming financial products, with a loss of 13.4% in market price.
These facts do not incline or mirror the common narrative that institutions have dipped their feet into Ethereum. Ergo, retail might still have a dominant hand and hodlers might be more responsible for the rally right now, more so than accredited investors.
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