Coinbase Yearly Review Shows Growing Institutional Interest in Ethereum
2 min readA yearly report from Coinbase shows a relentless increase in Ethereum interest among institutional investors.
The primary reason for this growing positive sentiment is because investors see it as a haven to preserve their wealth.
Why the Sudden Interest?
2020 was the year that crypto experienced the highest level of interest from corporate investors. According to Coinbase’s Jan 22, 2021 report, these institutional buyers aren’t just buying bitcoin. They see ethereum as a digital commodity that can support other transactions within its ecosystem.
Bitcoin still maintains its position as the most purchased digital asset among institutional investors. There has also been a significant acceleration in the number of short positions for the second-largest cryptocurrency on Coinbase.
The ethereum price has outpaced that of most assets as it recorded a stunning 487% increase last year. Since then, eth has rallied even further, almost doubling to its previous all-time high. The price currently sits at about $1,315 at press time.
There seems to be a confluence of fundamentals for Ethereum due to several reasons. These factors make a case for a strong value proposition, which perhaps a large part of the market is yet to grasp.
An upgrade of the network to ETH 2.0 has resulted in a lock-up of many tokens. This accounts for the supply shock that is already playing out as available tokens move away from exchanges.
Coinbase, which has become a major broker for institutional buyers, is not exempt from this supply shortage.
Onchain Coinbase Records Support the Narrative
Onchain data from CryptoQuant indicates that the number of eth addresses transacting out of Coinbase wallets has risen substantially over the last few months. The highest outflow was recorded on Jan. 1. At this time, the price of ethereum was around $729.
This activity occurred six days after the mainnet launch of ETH 2.0 and is the highest since the beginning of 2020. The launch required that stakers hold a minimum of 32 ether, explaining the spike in the transfer from Coinbase.
Grayscale is one of the most prominent institutional investors that has shown serious interest in Ethereum. This corroborates the Coinbase report since Grayscale has stored a decent amount of eth into its reserve.
Before Dec. 9, when the announcement was made, the holdings in the Grayscale Ethereum Trust stood at $1.64 billion. An additional 105,000 eth, valued at $58.5 million, saw its portfolio swell to about $1.7 billion.
The dollar value of Grayscale’s eth holdings has risen by about 165% since it’s last purchase.
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