The crypto space is on fire and hype went into overdrive this week after Bitcoin (BTC) crossed the all-important $100,000 threshold for the first time. But the rally has not been exclusive to BTC. Other coins have been going on some majestic runs, and soaring to new heights or levels not seen for several years.
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One coin, however, that has been a bit of a laggard so far is the sector’s second biggest name, Ethereum (ETH). While Bitcoin has soared to new highs some distance above the previous cycle’s peak, Ethereum still sits 20% below the peak notched in November 2021.
According to top investor Mike Fay, who’s ranked in the top 4% of TipRanks’ stock experts, there’s likely a plausible explanation for this. “The capital flow story simply hasn’t been there for ETH,” he remarked, shedding light on the lag.
Recent data, however, suggest that Ethereum’s fortunes might be shifting. According to CoinShares, digital asset investment products recorded eight consecutive weeks of positive capital flows by the end of November. In fact, 11 of the last 12 weeks saw net positive inflows into these products. Interestingly, the final week of November was a bit of an exception, as Ethereum, rather than Bitcoin, drove the net flows into positive territory.
Ethereum investment products saw global net inflows totaling $634 million, primarily driven by U.S. spot Ethereum ETFs. To put the $634 million in perspective, that single week represented 29% of the year-to-date asset flows for Ethereum investment products.
“It was a huge week and perhaps indicative of a large sentiment shift in ETH heading into December and beyond,” Fay went on to add.
Despite ecosystem usage growing on the back of scaling efforts, sentiment has been downbeat, but it should be remembered that the Ethereum main chain continues to dominate the DeFi space, and a large-scale migration of TVL (total value locked) to cheaper networks has yet to occur, even though clear user incentives exist for such a transition.
And looking at previous bull markets, it’s also quite likely the rally has legs still and Fay believes the recent capital flows might be an indication it is “Ethereum’s turn to make a new high.” (To watch Fay’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
