Institutional Interest in ETH Doubles Down

“Institutional money managers have moved in to start hedging net long portfolios against outsized volatility events,” Two Prime wrote in a recent report.

article-image

Source: Shutterstock

share
  • The price of ether has risen 907% in the past year as institutional interest hits overdrive
  • Two Prime’s research models an eventual decoupling of bitcoin and ether

Ether (ETH), the eponymous token of the Ethereum blockchain, is “steeply undervalued” compared to bitcoin, and investors have taken note driving up the size of the open interest market for ether, research house Two Prime wrote in a recent report.

“Institutional money managers have moved in to start hedging net long portfolios against outsized volatility events,” Two Prime wrote. The report noted that the size of the open interest market grew from $365 million in April 2020 to $7.5 billion as of April 2021. 

“Ultimately the volatility of these products will be consumed by traditional finance arbitrageurs, derivative traders and automated trading programs,” Two Prime added.

Total ETH Options Open interestSource: Skew via Two Prime

“Option markets rely heavily on active institutional investors with a sophisticated approach to risk management,” they wrote. “Options volume and option open interest has subsequently increased to reflect higher institutional adoption of Ethereum.”

The report also noted the rapid exchange outflow of ether beginning in late 2020 due to “large-scale institutional purchases that temporarily overwhelmed coin mining production and strained the ability of trading exchanges to meet demand.”

According to Two Prime, part of this outflow has come from staking demand, the value of staked ether is now over $9 billion. As Blockworks has previously reported the interest in bond-like digital assets that staking provides has fueled demand amongst institutions. 

All of this is eventually going to break the correlation between bitcoin and ether, reported Two Prime. 

“While ether’s price historically correlates 90% to bitcoin, we expect to see increasing independence in price behavior as the Ethereum ecosystem grows in capability, credibility and volume,” the research house wrote citing the sharp spike in demand for NFTs and DeFi. “In the near term, we expect continued price appreciation as funding continues to support creative growth in decentralized applications and institutional investors purchase additional ether.”

The price of ether is currently $2,700, according to CoinGecko, and is up approximately 15.6% on-week. Bitcoin, in contrast, is down 2% on-week. 

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (8).png

Research

Kinetiq has established itself as Hyperliquid's dominant liquid staking protocol, holding 82.5% of LST market share with $610M in TVL. The protocol is now expanding beyond its kHYPE staking core into higher take-rate verticals: iHYPE for institutional custody rails, Launch for HIP-3 capital formation, and Markets for builder-deployed perpetuals. We view Markets, launching Jan. 12, as the highest-potential product line given its mechanically scalable, activity-linked unit economics. Near-term revenue remains anchored by kHYPE's KIP-2 fee schedule (~$1.6M annualized), while Markets provides embedded optionality if HIP-3 economics normalize post-Growth Mode. KNTQ's setup is relatively clean: zero insider unlocks until November 2026, 6.2% buyback yield from staking revenue, and cleared airdrop overhang. Risks center on unproven Markets execution, declining kHYPE TVL despite ongoing incentives, and competition from Hyperliquid's native initiatives.

article-image

BTC finished the week up 1.6%, while L2s, RWAs and the treasury trade continued to grind lower

article-image

DTCC moves DTC-custodied Treasuries onchain via Canton, while Lighter’s LIT launches trading at a fees multiple in Hyperliquid territory

article-image

In the 90s, rapt audiences worldwide watched a coffee pot — will that fascination ever turn to crypto?

article-image

Some systems improve by failing — and crypto has no choice

article-image

Yield Basis introduces an IL-free AMM design that already dominates BTC DEX liquidity

article-image

Maybe tokenholders don’t need the rights that corporate shareholders have come to expect

Newsletter

The Breakdown

Decoding crypto and the markets. Daily, with Byron Gilliam.

Blockworks Research

Unlock crypto's most powerful research platform.

Our research packs a punch and gives you actionable takeaways for each topic.

SubscribeGet in touch

Blockworks Inc.

133 W 19th St., New York, NY 10011

Blockworks Network

NewsPodcastsNewslettersEventsRoundtablesAnalytics