The second-ranked cryptocurrency Ethereum seems to have found a short-term basis for assets recording an increase in capital inflows.
Between March 20th and March 27th, Ethereum’s market capitalization increased by approximately $ 31 billion from $ 346.7 billion to $ 377.1 billion as the Proof of Stake (PoS) upgrade was expected.
The market monitors whether recent gains have expanded, but Ethereum has maintained capital inflows for two weeks. After the successful launch of Ethereum’s “Merge” on the Kiln Testnet, the bulls awoke from March 15th and experts helped upgrade to the rally.
PoS allows investors to bet Ether. This is a feature that is likely to attract more players to the platform. In addition, the PoS protocol significantly reduces Ethereum’s electricity consumption, making it even more attractive to institutional investors involved in environmental, social and governance (ESG).
Notably, assets outperformed Bitcoin over the same period, recording market capitalization fluctuations.
The driving force of interest in Ethereum
According to Aya Kantorovich, Head of Institutional Coverage at FalconX, the excitement about the upgrade has increased interest in Ethereum.
In addition to the upgrade, Kantrorovich has linked growth to other market activities such as bullish around Bitcoin.
She said the inflow of capital could also result from hedge funds and private investors taking a share of profits from Bitcoin and transferring it to Ethereum.
In addition, Kantorovich said that despite Bitcoin being traded behind Ethereum, it is recording a decline in volatility despite being the number one cryptocurrency.
She said recent transactions correlate with stocks because institutional investors are influencing the price of Bitcoin.
“So you can see that the volatility is declining. This really needs to be adopted in large quantities and both are seen throughout the desk. You can see that Bitcoin is some of the traditional financial assets. We are starting to see very similar. In general, the market is liquid and the price of Bitcoin is driven by institutional investors, “she said.
Ethereum currently has a low market share, but some analysts believe it will surpass Bitcoin due to the continued development of the blockchain. Overall, Bitcoin’s market advantage is an important aspect to monitor, with metrics slightly above 40%.
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