Institutional investors' enthusiasm for ETH heats up as merger looms

The price of ethereum may have fallen again today, but there are signs that professional investors are warming up to the asset as the much-anticipated merger draws closer.

In its weekly report on digital asset fund flows, fund manager CoinShares reported that ethereum-based products saw inflows for the third week in a row. Institutional Ethereum funds saw $7.6 million inflows, while Bitcoin funds continued to lose $1.7 million in outflows.

Referring to the Ethereum Fund, CoinShares stated: “After 11 consecutive weeks of outflows leading to peak outflows of $460 million in 2022, inflows indicate a slight improvement in market sentiment.” The firm added, The change in market sentiment may be due to the growing likelihood of a merger later this year.

The merger is a much-anticipated upgrade for ethereum, shifting its consensus mechanism from proof-of-work to proof-of-stake. Currently, it is preparing for the final test, which is expected to be merged by October.

In late June, during a week when outflows from crypto funds hit a record $423 million (most of which came from bitcoin funds), institutional investors began funneling money back into ethereum funds.

During the period, crypto funds saw total inflows of $14.6 million last week, but funds shorting Bitcoin accounted for $6.3 million, suggesting investors remain bearish on Bitcoin. Inflows to U.S. funds and exchanges totaled $8.2 million, of which 76% were short positions, a similar percentage to the week ended July 8.

The enthusiasm of institutional investors for Ethereum is not reflected in the spot price today. As of this writing, ETH is down 2.9% in the past 24 hours to $1,047 and is down 28% in the past month, according to data from CoinGecko.

Crypto Twitter has been busy debating whether Ethereum should be classified as a security, and the specter of tribalism rears its ugly head again. Bitcoin supremacists have backed MicroStrategy CEO Michael Saylor, who said last week that ETH is "clearly" a security.

However, this was widely disputed by ethereum supporters, including co-founder Vitalik Buterin, who offered his views on the controversy on July 12. On July 12, Bitcoin supporter Nick Payton stated that voting to change the attributes of the PoS platform proves that PoS assets are securities. Vitalik Buterin refuted the claim, calling it a “complete, flat-out lie” and stating that PoS does not include voting on protocol parameters.