Institutional investors, such as JPMorgan, Ark Invest, MicroStrategy, Tesla, Andreessen Horowitz, and others, have played a significant role in the 2021 rally of Bitcoin’s market value. Their support has been pivotal in recognizing the potential future use cases of Bitcoin and other cryptocurrencies. However, an interesting shift in preference is emerging among these investors, with many recently favoring Ethereum (ETH) over Bitcoin (BTC).
This preference continues to strengthen following Ethereum Merge and Shanghai upgrade, with traders anticipating smaller fluctuations in Ethereum than in Bitcoin in the short term. Ethereum’s 30-day volatility index now trails more than Bitcoin volatility index, making institutional investors more interested in ETH as an investment.
The lower volatility generally allows institutional investors to allocate more capital to crypto, and long-term investors are more likely to increase exposure to Ethereum. Richard Galvin, co-founder at fund manager Digital Asset Capital Management, supports this view by arguing that Ethereum staking yields are expected to rise further following the Shanghai upgrade in April.
Despite the preference for Ethereum, the US SEC has refused to recognize it as a non-security asset. SEC Chair Gary Gensler maintains that Ethereum’s transition to a proof-of-stake (PoS) system has transformed it into a security. This argument stands in contrast to observations of Ethereum and Bitcoin’s price correlation, which has recently dropped to its lowest point since 2021.
Meanwhile, Bitcoin’s blockchain is impacted by Bitcoin ordinals non-fungible tokens and meme coins. While the price of Ethereum remains relatively stable, trading above $1800, Bitcoin’s price is at risk of falling below $25,000. The price of Bitcoin has dropped 1% in the past 24 hours, with the 24-hour low and high of $26,549 and $26,986, respectively.
The shift in preference from Bitcoin to Ethereum raises critical questions about the future of cryptocurrencies – which coin will emerge as the most stable and reliable long-term investment? Furthermore, will regulatory bodies such as the SEC adapt their stance on cryptocurrencies like Ethereum, especially considering the growing interest from institutional investors?
In summary, institutional investors are increasingly interested in Ethereum over Bitcoin due to lower volatility, while questions remain over the regulatory status of Ethereum and the future of cryptocurrencies.
Source: Coingape
