Ethereum: Why We Have Yet to See the ETH Rally

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I see more room for growth, as Ethereum undergirds the infrastructure of a rapidly growing crypto ecosystem: DeFi. |
By Raghu Yarlagadda

On May 10th, Ethereum (ETH) hit an all time high, punctuating a run up in price that nearly matched the frenzied rally Bitcoin experienced in 2020. Through conversations with some of the biggest institutions, I see more room for growth, as Ethereum undergirds the infrastructure of a rapidly growing crypto ecosystem: DeFi.

While consumers, through a desire for higher yield and easily accessible financial products, first initiated Decentralize Finance (DeFi), we are now seeing DeFi applications push the entire blockchain marketplace to new heights both on Wall Street and Main Street. Today, not only are large financial institutions building the infrastructure to invest in Bitcoin, they are expanding into Ethereum with the belief that the demand for this digital asset will continue to grow as the applications built on top of them expand.

How did we get here?

In working with institutional investors, we have been at the forefront of the diversification from traditional asset classes into crypto. A year ago, the only entities doing this were crypto-native. Over the past few months, the narrative has shifted dramatically with large volumes, mainly in Bitcoin, coming from traditional financial institutions and Fortune 500 company balance sheets. The reasons behind this trend are numerous, but typically center around inflation hedging, geopolitical risk hedging and dampened expected returns coming from traditional asset classes.

Returning 15%, 2020 was a banner year for the S&P 500. While impressive on an absolute basis, that return pales in comparison to the staggering 300% return that Bitcoin had in that same year. These high, less-correlated returns are enticing to institutional investors and causing them to explore where that level of growth may come next. For some, that answer remains Bitcoin, but many believe the next leg of…
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