Ethereum (ETH) is the largest decentralized server in the world. You can create smart contracts, dApp and even your own coins. The picture shows an Ethereum metal coin in front of a price graph.
Ethereum is so far one of the best performing crypto assets of the year, which has finally gained strength again after a brutal bear market in 2018 and 2019 and meanwhile over 90% loss compared to its all-time high.
An important catalyst for the recovery of Ethereum is the fact that institutions are buying huge amounts of the cryptocurrency, which has to do with the fact that the decentralized finance (DeFi) sector has experienced a huge hype, especially in the last few months.
Grayscale now holds 2% of all BTC and ETH
According to Barry Silbert, the CEO of the Digital Currency Group, until recently Grayscale’s Ethereum Trust quietly accumulated 2% of all ethers in circulation. Grayscale is a digital asset management company owned by DCG that now manages approximately $ 6 billion for institutional clients such as hedge funds and family offices. Silbert writes on Twitter:
While everyone has been focused on our Bitcoin accumulation, the @Grayscale Ethereum Trust now holds over 2% of all ETH in circulation
Extrapolated, 2% of all Ethereum funds in circulation are around 2.25 million ETH, currently valued at over USD 800 million.
The above statement from Silbert comes after the company announced that it accumulated $ 1.05 billion in deposits over the course of the third quarter, a record for the company. Of this capital alone, USD 720 million flowed into Bitcoin. Grayscale isn’t the only institution buying into Ethereum.
Institutions mainly buy ETH if they are interested in DeFi
The head of DTC Capital, Spencer Noon, says that the institutional interest in DeFi manifests itself primarily in investments in ETH and not in actual „yield farming“ operations or DeFi-Coins themselves:
My assessment of # DeFi after speaking to institutional investors, fund managers, OTC desks and FOs over the past few weeks: The herd is coming. Excited about DeFi, but new to it, so buy $ ETH first.
However, Noon believes that investors who are invested in Ethereum but have an interest in DeFi will ultimately “widen the risk spectrum upwards” once they become more familiar with the concepts and protocols of the industry.
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Ethereum is doing very well
This massive ETH accumulation comes about as the fundamental trends in cryptocurrency suggest that Ethereum has a bright future ahead of it.
Spencer Noon recently shared three key factors that show Ethereum is stronger than ever from an on-chain and fundamental standpoint. In particular, he pointed out the fees collected by the miners, the number of Ethereum-based contract calls and the number of daily active addresses:
L1 Health – Long-term fundamental indicators show that Ethereum has arguably never been healthier. 1. ETH now exceeds BTC in total daily fees in USD 2. 115 million contract views in September, up from 57 million in June 3. Daily Active Addr consistently above 400k.