Institutional investors are piling into ether-based digital asset funds, which have seen seven straight weeks of positive inflows, according to the latest CoinShares report.
These inflows reached $16.3 million last week, resulting in a total inflow of $159 million over the past seven weeks.
James Butterfill, CoinShares’ head of research, said on Aug. 8 the surge in market sentiment for Ethereum-focused products was largely due to “greater clarity” surrounding the upcoming merger, which is slated for Sept. 19, with Butterfill explained:
“We believe this turn in investor sentiment is due to greater clarity on the timing of The Merge, which will see Ethereum move from proof-of-work to proof-of-stake.”
The merger will merge the Ethereum mainnet with the Ethereum 2.0 Beacon Chain, completing the transition from Proof-of-Work (POW) to a Proof-of-Stake (POS) consensus mechanism. The POS consensus mechanism aims to make Ethereum more secure, energy efficient, and environmentally friendly.
The Görli and Prater testnet merge is also expected to happen this week, which will be the last scheduled dress rehearsal before the mainnet merge is less than six weeks away.
Dealers prepare
Blockchain analytics firm Glassnode suggested that the much-anticipated merger will make crypto traders “buy the rumor and sell the news.”
“Derivatives traders are placing directional bets for Ethereum, particularly in relation to the upcoming merger scheduled for September 19.”
In an Aug. 8 newsletter titled “Betting on the Merger,” the analytics firm noted that post-merger, the ETH options and futures market is in a “backward move” — a situation in which an asset’s current price has fallen is higher than the prices traded on the futures market.
“Both futures and options markets are in backwardation post-September, suggesting traders expect the merger to be a buy the rumor sell the news style event and have positioned themselves accordingly.” , the company said.
Also Read: Ethereum Options Data Shows Pro Traders Ready to Go Long into ETH Merge
However, it is still unclear how the merger will ultimately affect the price of Ethereum. In a recent interview, Ethereum founder Vitalik Buterin remained optimistic about ETH’s long-term prospects, saying that the post-merger narrative is likely to remain positive – an aspect that hasn’t been priced in yet.
“Once the merger actually happens, I expect morale will increase greatly. I generally assume that the merger will not be priced in, by which I mean not only market terms, but also psychological and narrative terms. Narratively, I don’t think it’s going to be pretty much priced in until it happens.”
Ethereum is priced at $1,776 at the time of writing, up 8.6% over the past seven days, according to CoinGecko data.