Ethereum Investors Act With Caution (Report)

The Merge, one of the biggest developments in the cryptocurrency industry, became a news selling event. Although the long-awaited transition did not light a fire under the price of Ether, many experts believe that it will provide some strong tailwinds going forward.

However, investors are treading cautiously. The figures come amid a week of relatively low activity as a mix of positive and negative flows from providers and assets continues to demonstrate a lack of engagement among investors today.

According to the latest edition of Digital Asset Fund Flows Weekly, CoinShares reported that flows following the Ethereum Merge flows indicated continued caution among investors. As such, the fourth week of departures was $15 million, while the year-to-date totals stood at a staggering $375.8 million.

However, the series of exits has been quite less and was registered at 80 million dollars.

Investors remain warned

After years of delays and setbacks, Ethereum finally transitioned to a Proof-of-Stake network without problems. The data reveals that the amount of ETH staked has been on a steady upward trend, while network participation also remained high. The diversity of customers also went in the right direction. So far, there are no noticeable hiccups on the technical side of things.

The entire staking process theoretically presents bullish prospects for the crypto-asset. Circulation is expected to come down in the form of a fee that must be paid to the network to execute transactions. Subsequent holders who choose to participate may also remove ETH from circulation, and the asset could deflate as scarcity begins to weigh on the token’s circulation. Despite this, institutional investors remain spooked.

One of the biggest factors might be scalability. Although the merger was a pivotal moment, Ethereum is still far from implementing a sharding solution to dramatically increase network speed despite meeting crucial goals such as energy consumption issues and reducing carbon emissions.

Next, in line with a series of improvements, is “The Surge” towards a more secure and decentralized network. The upgrade involves making transactions cheaper by splitting them into several different chains in a way designed to lower fees while speeding them up.

At the end of the Verge, Purge, and Splurge updates, Ethereum will be able to process 100,000 transactions per second, according to Vitlaik Buterin. But that would take a lot of time. For example, the Surge on its own isn’t running this year.

Earned or not?

Ethereum’s scalability upgrades scheduled for next year don’t necessarily make it any less lucrative. In fact, making Ethereum greener will pave the way for traditional corporations and large financial institutions to participate more in equity opportunities.

Additionally, an Ethereum PoS validator can receive an annual percentage return (APY) of approximately 5%, making it a fairly attractive income stream given the relatively low risk associated with it.

Fidelity Digital, in a recent report, noted,

“Ethereum’s shift to proof-of-stake makes Ether an asset that can generate interest for holders in the form of stake. This yield generation has the potential to increase the total return for Ether holders and can make make the asset more attractive to potential investors.”


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