Ethereum set to outperform Bitcoin as big investor sentiment for crypto improves

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As the crypto market moves higher this week ahead of some important Fed-related macro-financial dates, a regular top-tier survey indicates that Ethereum (ETH) is the coin that the biggest investors are pushing.

According to the latest report from CoinShares, one of Europe’s largest digital asset trading and investment groups, Ethereum, the number two crypto by market capitalization, has seen a “dramatic increase in investor sentiment.”

A record 60% of respondents to its survey indicated that ETH has the most compelling growth prospects among the cryptocurrencies in which they have an investment interest, including Bitcoin (BTC).

The survey was conducted for the period beginning December 29, 2022 and ending last week, January 23. It consisted of 43 investor responses that cover $390 billion in assets under management, so some pretty big players, in other words.

According to data from CoinShares, these types of investors “currently express few opinions on other digital assets” other than BTC and ETH.

“Despite deteriorating Bitcoin sentiment toward Ethereum, an increasing number of survey respondents have invested in both,” reads the report, adding:

“This appears to have come at the expense of Ethereum’s altcoin competitors, such as Cardano and Solana.”

Source: CoinShares Quarterly Digital Asset Fund Manager Survey

Is Ethereum’s Shangahi Upgrade Bullish?

Ethereum, if you were unaware, has quite a large narrative that is most likely contributing to some of its market moves lately. And that’s the next protocol update, slated for sometime in March, dubbed Shanghai.

With Ethereum’s “merger” of a proof-of-work protocol, like Bitcoin, to proof-of-stake, early stakingrs/validators on the updated blockchain have yet to be able to withdraw their staked ETH tokens securing the network and yield carriers . This changes with the Shanghai update.

Wait, isn’t more ETH available to be sold on the open market a bearish thing? Some people think so, but overall the upgrade is seen as extremely positive for the future growth of Ethereum.

About 14% of the total ETH supply is staked, and it can be released after the Shanghai fork. This makes some people bearish.

But this ETH does not immediately arrive on the market: it still has to go through a withdrawal queue.

It takes time to untangle. pic.twitter.com/5iY4S3rMIz

— Jack Niewold (@JackNiewold) January 26, 2023

Liquid staking spin-off projects, such as Lido DAO, Rocket Pool and related infrastructure games, for example. SSV certainly profited from this narrative. You can read a bit more about it here in our recent conversation with Apollo Crypto.

Regulation seen as the solution, not the problem

The CoinShares report also revealed a few other telling and broadly bullish highlights, including the following:

The weighting of digital assets in investment portfolios for the survey period accounted for 1.1% of portfolios, which is an increase from the previous reading of 0.7%.

Investors have cited both “speculation and exposure to distributed ledger technology” as key reasons for their increased focus on the high end of the crypto sector.

Despite FTX’s implosion last year, more of these big clients are asking their fund managers to increase their crypto positions. There is also a drop in the number of those who view crypto as a “reputational risk.”

Additionally, while regulatory concerns for the industry are still present, it seems that few of the investors surveyed expect the worst on this front, ie. political blocking from crypto critics such as Senator Elizabeth Warren, or worse, a ban from the US government.

According to CoinShares, this sentiment suggests investors see regulation “being the solution rather than an outright ban.”

And speaking of sentiment, take a look at how the Fear & Greed index of the market is doing today. A little different from where things were following about a month ago

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