Institutional Investment Is Flowing Out Of Ethereum To Other Coins• April 27, 2022 9:58 pm • Comments
The data from CoinShares’ Digital Asset Fund Flows report is showing that institutional investors are starting to move their capital out of Ethereum to other top coins.
Capital flows have been flowing outwards from Ethereum for 3 weeks now and is ending up into projects like Algorand, Solana, and Terra.
So far, the capital outflows during this period of time is about $59.3 million and the total outflow year to date is about $169 million.
Reasons for the outflows can be attributed to multiple reasons such as investors wanting to decrease their exposure to Ethereum, increasing the diversification of their portfolios by allocating more to top altcoins, or because of the increased risks of Ethereum being not as decentralized as previously thought.
— Blockchain Feed (@AYF_Blockchain) April 27, 2022
Notably, investors also favored digital gold last week despite some recent hesitancy, with Bitcoin (BTC) products fetching $2.6 million worth of inflows.
Over the past 10 weeks, inflows to Ethereum products have reached only $68.5 million in what could signal a bearish trend by institutions towards the major blockchain.
Alternate layer-1 blockchains have been growing in popularity recently, and decentralized application (DApp) usage on Solana in the last seven days has increased, according to metrics from DappRadar.
Usage for the decentralized exchange (DEX) Orca has grown nearly 43% over the week, and automated market maker (AMM) Raydium has seen a 15.5% increase, with volume in its app reaching over $1.5 billion.
Inflows for other top altcoins have also been quite impressive during this period of time as well.
AVAX, LUNA, ALGO, and SOL all saw inflows that were higher than previous months while Bitcoin also maintained an inflow of $2.6 million for the first time in 2 weeks.
It was also observed that the total crypto market has observed to be around $220 million which may indicate that many digital assets are being moved off exchanges and into private wallets.
This could potentially be from continued accumulation from large whale wallets owned by institutional investors.
Whether this shift in focus from Ethereum to other top competitors is something that will continue is still to be determined, but it certainly means more market share for the likes of XRP and ALGO.
Institutional investment flows out of ETH and into competing L1 altcoins – FXStreet https://t.co/xGnulr15zW
— Cryptomeddler (@cryptomeddler) April 27, 2022
This is the third week in a row that Ethereum products have seen outflows, bringing the total to $59.3 million equating to about 35% of the $169 million year-to-date outflows from the second largest blockchain.
Investors notably also rallied around digital gold last week, despite some recent hesitation, and Bitcoin (BTC) products received $2.6 million worth of entries.
In the last 10 weeks, inflows to Ethereum products have reached only $68.5 million which could indicate a bearish trend of institutions towards the main blockchain.
Alternative layer 1 blockchains have grown in popularity recently, with the use of decentralized applications (DApps) on Solana in the last seven days increasing, according to DappRadar metrics.
Usage of decentralized exchange (DEX) Orca has grown nearly 43% over the week, and automated market maker (AMM) Raydium has seen a 15.5% increase, with volume on its app reaching over USD 1.5 billion.
Ethereum is currently the second largest blockchain by market cap, but fast growing competitors may soon surpass it.
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