According to cryptocurrency market maker Cumberland, institutional investors are banking on Ethereum ($ETH), the second-largest cryptocurrency by market capitalization, when its price is soaring to outperform the larger market.
The climb in Ethereum’s price has continued despite a recent downturn, according to a post on Twitter credited to Cumberland’s head of trading, Johan Van Bourg. While ETH’s price movement has historically been technical and extremely macro-correlated, Cumberland claims its most recent move has been “crypto-fundamental.”
Over the past week, ETH quietly rallied 55%. Prices have retraced this morning, but the broader up-trend is intact and it’s worth understanding why 🧵👇
— Cumberland (@CumberlandSays) July 21, 2022
The market maker cited the successful Proof-of-Stake merge of the Sepolia testnet on July 6 as creating the conditions “for an early-autumn mainnet merge.” The Ethereum Merge details how the network’s current mainnet will combine with the PoS mechanism of the Beacon Chain, paving the way for upcoming scaling improvements like sharding. The change is anticipated to cut Ethereum’s energy use by 99.95%.
Ethereum is Betting on The Merge
At a PoS Implementers Call, Tim Beiko, an Ethereum protocol support developer at the Ethereum Foundation, predicted that the Merge would take place in September. The Merge timeframe is likely to alter over time, according to Beiko.
The “development of a yield-bearing, deflationary, mega-cap asset is a huge event,” Cumberland continued, noting that the action by Ethereum also “matters to the people who worry about climate change.”
It “doesn’t take much flow to shift the needle,” according to the business, and portfolio allocations to Ethereum are “hardly overcrowded.” The buy/sell ratios are tilting long, indicating that flow is seen at its over-the-counter (OTC) trading desk.
While volatility can “be off-putting,” it’s “not without justification,” according to the market maker, as Ethereum is a “world computer” and “global settlement layer with immense promise.” He also noted that it’s “always easier to purchase a rebound than to catch the falling knife.”
Cumberland’s remarks come at a time when Ethereum whales have begun acquiring more of the digital currency as its price has increased over the past week, partly because of the projection for the day when the blockchain would undergo the Merge.
Ethereum Price is on the Rise
According to data from Tradingview, the price of Ethereum increased by more than 50% over the past 30 days, outpacing that of the leading cryptocurrency, Bitcoin, which rose by only about 16%.
As Ethereum’s price increased from about $1,050 to over $1,600 at the time of writing, ETH whales increased their accumulation rate. As a result, they now control more than 22.4 percent of the cryptocurrency’s circulating supply, according to on-chain analytics company IntoTheBlock.
