Grayscale Explains Why Ethereum Has Become More Attractive To Investors

Grayscale Explains Why Ethereum Has Become More Attractive To Investors

Ethereum, the world’s second-largest cryptocurrency right behind Bitcoin, has had a successful 2020 based on institutional buyers’ entry. The popular crypto also had the first phase of its new technology in motion at the beginning of December. Things are looking promising for the crypto and could be one of the primary reasons why some investors are interested.

How Ethereum broadened its market

Grayscale’s managing director, Michael Sonnenshin, explained that investors were mainly looking into Bitcoin as the only feasible cryptocurrency investments some years back. But now, Ethereum has become more attractive to institutional buyers. Grayscale is a prominent firm in digital assets investing and management of funds.

Michael revealed that some investors had seen Ethereum as a first investment, and even in some cases, their only digital asset investments. A larger market is brewing on the cryptocurrency as an essential asset. Based on some analysis from its Grayscale Ethereum scale, the firm has almost 30 million shares in outstanding positions, contrary to the previous year, which had 5.2 million outstanding shares.

The 3rd quarter of 2020 records over $200 million in influx, opposing the 4th quarter of 2019, where the firm has inflows of $20 million. The change in inflow could interpret as larger pockets entering into the crypto investments. He also reported that from the analysis of the 3rd quarter, over 17% of the influx came from new investors.

Its also safe to note that the ETH has risen in trading, from 18% last year to 120% in 2020 trading, but dropped from the previous 950% around mid-2020. The trust is trading at almost 30% instead of early this year, with only 17% in trading.

The new YTD gains on the digital asset at 352% overtake 165% in the largest cryptocurrency globally, Bitcoin. The ETHs are priced at $600, very far from its highest all-time high, $1,450, which has worried some investors, but this did not stop new buyers.

Why the programming community like Ethereum

Mike McGlone, an intelligence strategist, explained that Ethereum might have the potential of leading the platforms with its signs of platform leadership. The first phase of the crypto was necessary to clear some problems facing the digital asset’s platform. With a more affordable cost and scalability of the Beacon Chain, investors might be sweeping in to invest in the altcoin. The Beacon chain also requires no transfer of funds to the new platforms because the old and new would be fused.

The crypto seems to be more attractive to the programming community, probably due to its technology. From the phone interview given to Michael, he opined that it had convictions surrounding it as an asset class. The volatility of cryptocurrency has discouraged some potential investors with fears of losing money when significant falls hit the assets. The instability in the prices might be a disadvantage and an advantage.

Traders take advantage of sudden price increases by selling their assets at great prices before the inevitable fall persists and causes a drop in value. Experts and risk managers often advise investors to tread with care in investing in cryptocurrencies.

David Pražák