As Ethereum trades around the 2017 all-time-high levels ($1,330), institutional investors are piling into the DeFi platform from all directions.
According to a Coinbase annual review for 2020, more institutional investors are beginning to see Ethereum as a formidable investment vehicle. In fact, the exchange noticed a “growing number” of its institutional clients have taken up positions in ether, the native currency of the Ethereum network due to its strong returns. By and large, these clients bought bitcoin in 2020.
“The case for owning Ethereum [ether] we hear most frequently from our clients is a combination of, first, its evolving potential as a store of value and, second, its status as a digital commodity that is required to power transactions on its network,” the report said.
Both Coinbase and Gemini exchange have taken a bullish view of ether in recent history. However, the Coinbase assertions of Ether as a store of value are factually questionable given that ether has a different use-case and a variable supply.
This is a well-documented and known fact.
On the other hand, Ethereum-based decentralised Finance, also known as the DeFi crypto sub-sector, continues to gain ground, offering an appealing take for Ethereum as a platform.
The vast majority of DeFi applications are currently built on Ethereum, which surpassed bitcoin in terms of transactions in July 2020. Contrary to 2018, decentralised finance applications are re-inventing the financial wheel on a larger scale.
Today, liquidity locked in DeFi has reached $26 billion. In February 2020, that figure stood at just over $1 billion.
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CME to launch Futures next Month
Earlier in December, the Chicago Mercantile Exchange announced the launch of an Ethereum futures market, laying out a clear case for institutional interest in Ethereum.
CME, the largest futures exchange in the world, will launch an Ethereum futures product alongside its existing Bitcoin product on February 8, 2021.
The Ethereum futures will be cash-settled and based on CME’s CF Ether-Dollar Reference Rate. One contract on CME will represent 50 ETH tokens.
The price of ETH surged by 128% since this announcement, and exchanges hands at $1,335.
Bitcoin’s breakout above all time highs to $42,000 has brought with it reinvigorated interest in the entire digital asset spectrum, as noted in prior newsletter reports.
Together, Coinbase’s 2020 review and the imminent launch of ETH futures on CME signals an institutional demand for trading the number two digital asset.
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