Smart Money Has Been Buying the Ethereum Merge Narrative

Institutional investors and whales are buying and staking ether as the Merge’s success appears likely

article-image

Source: DALL·E

share

key takeaways

  • Nansen’s Merge report showed smart money ether holdings rising since June
  • “Ethereum is taking over and smart money is jumping ship [away from Bitcoin] quickly,” a digital asset investor said

Crypto’s largest investors have been buying ether ahead of the Merge.

Ethereum’s upgrade from proof-of-work to proof-of-stake is imminent, and investor jitters along with potential forked ether tokens have led to outflows of ether from lending platforms in recent days. But institutional investors and deep-pocketed “whales” have accumulated ether and staked it in recent weeks, signaling confidence that the Merge will be successful.

Nansen researchers noted a steady buy trend since mid-August among whales and “smart money” alike. The blockchain analytics platform defines smart money as crypto traders it considers “experienced, well informed or ‘in the know’” — such as funds and large liquidity providers.

Ether holdings on the rise since June; Source: Nansen Merge Report

It’s unsurprising that investors who already own large amounts of ether are bullish on Ethereum’s Merge. But it appears that institutional investors across crypto see a buying opportunity.

“I’ve seen today, for example, a major fund [which is] one of our investors buying Coinbase staked ETH at a discount,” Will Harborne, CEO of the crypto exchange Rhino.fi, said, adding he finds fears of fork-related turmoil following the Merge “boring.”

“The Merge is going to be successful. It’s definitely going to be really smooth,” Harborne said.

Smart money may be more fearful of the broader macro environment than of software bugs, especially as the latest US inflation figures came in higher than expected. The Merge has created a perception that ether is the safest bet in the bear market, according to Max Williams, chief operating officer at Runa Digital Assets.

“Given the macro backdrop, [the Merge] is the best catalyst” for crypto, Williams told Blockworks. “In the bear market, [traditional wisdom says] hold onto the safest assets, which has really meant bitcoin, but [ether] is taking over and smart money is jumping ship quickly.” 

Ethereum post-Merge still faces a shaky macro outlook, and Williams predicts staked ether yields will fall over the next year, barring a dramatic rise in activity on the Ethereum network. 

But smart money evidently still finds proof-of-stake Ethereum worth the risk.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

TBC President Lee Bratcher told Blockworks he’s “confident” about the Council’s case against the DOE

article-image

The Monday trading volumes total passes the previous high mark set on the fund’s first day of trading nearly seven weeks ago

article-image

The hearings are expected to last for a couple of days as the court hears arguments for and against the bankruptcy plan proposed by Genesis

article-image

Equities were mixed toward the end of Monday’s session while cryptocurrencies continued their rally

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?