Institutional investor sentiment towards ETH improves as merger nears

Professional investors turn to Ethereum again as ETH-based funds see third straight week of inflows.

Ether (ETH) prices may have fallen further on Wednesday, but there are signs that professional investors are turning to the asset as the highly anticipated merger nears.

In its weekly digital asset fund flow report, fund manager CoinShares reported that Ether-based products saw inflows for the third week in a row. There was an inflow of $7.6 million for institutional Ether funds, while those for Bitcoin (BTC) continued to exit with a loss of $1.7 million.

Referring to Ether funds, CoinShares said, "Inflows suggest a modest turnaround in sentiment, after enduring 11 straight weeks of outflows that took 2022 outflows to a high of $460 million." He added that the change in sentiment could be due to the growing likelihood of the merger happening later this year.

The Merge is a highly anticipated upgrade to Ethereum that changes its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS). It is currently preparing for a final test, and the actual merger is expected before October.

In late June, institutional investors began pouring capital back into Ether-based funds in a week that saw record outflows of $423 million, with the majority coming from Bitcoin-based funds.

For the period, there was an overall inflow of $14.6 million, but Bitcoin shorts accounted for $6.3 million, suggesting that investors were still bearish on the king of cryptography. US funds and exchanges saw inflows totaling $8.2 million, 76% of which were short positions, a similar percentage to the week ending July 8.

The warming of institutional investors to Ether has not been reflected in t...