Bitcoin

Ethereum inflows increase amid speculations on The Merge


The Ethereum Merge is slated to happen later this year. The Merge is an eagerly-awaited process by the Ethereum community, as it will see the network transition from a proof-of-work consensus to proof-of-stake.

Institutional investors have expressed notable interest in Ethereum as the Merge nears. Ethereum’s transition to PoS is expected to threaten Bitcoin’s dominance in the crypto space due to the energy demands of PoW algorithms.

Institutional investors express interest in Ethereum

On June 13, Ether prices dropped again in tandem with the ongoing bear market. However, there are signs that institutional investors are becoming more interested in the largest altcoin as the Merge to transition Ether to PoS nears.

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CoinShares released its digital asset fund flows weekly report showing that Ether-based products recorded massive inflows for the third consecutive week. Institutional Ether-based funds reported inflows of $7.6 million, while Bitcoin funds reported outflows of $1.7 million.

While analyzing the increased Ether inflows, CoinShares said that the activity suggested that the market sentiment was changing. Moreover, the token had witnessed 11 consecutive weeks of outflows, with 2022 outflows reaching a high of $460 million. The changing sentiment about Ethereum could be attributed to the upcoming Ethereum Merge expected to happen before the end of the year.

Institutional investors started pouring funds into Ethereum towards the end of last month. During the last week of June, there were massive outflows of around $423 million across the cryptocurrency markets. The majority of these outflows came from Bitcoin-based funds.

However, within the same week, the overall inflows came in at $14.6 million, but $6.3 million came from funds shorting Bitcoin. The activity shows that investors were bearish on Bitcoin. The largest cryptocurrency by market cap has been in a prolonged bear market since the beginning of the year.

Crypto-based funds and exchanges within the United States reported inflows of $8.2 million during the end of June. 76% of these inflows went towards short positions. The same percentage of short positions was also witnessed for the week that ended on June 8.

The Ethereum Merge

The Ethereum Merge has been part of Ethereum’s plan since the network’s inception. Ethereum developers are prepping for a final testing phase for the network before the Merge happens in October this year.

The Merge was initially slated to happen in August this year. However, Ethereum developers said they will delay the difficulty bomb that disincentivizes Ether miners. The difficulty bomb was pushed ahead by 100 days.

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