Institutional Investors Bet on $ETH, $ADA, and $SOL as Crypto Market Prepares for the Merge

Institutional investors have allocated their bets to smart contract networks including Ethereum ($ETH), Cardano ($ADA), and Solana ($SOL) as well as to multi-asset investment products ahead of Ethereum’s long-awaited transition to a Proof-of-Stake (PoS) consensus mechanism.

According to CoinShares’ Digital Asset Fund Flows report, digital asset investment products saw inflows totaling $3 million last week, making it the sixth consecutive week of inflows, totaling $529 million which represents 1.7% of the total assets under management.

Despite the recent crash in crypto prices, the report details that 32 new investment products were launched in Q2, primarily focusing on altcoins. Minor inflows were seen across all regions, with Canada seeing outflows totaling $30 million.

While the flagship cryptocurrency Bitcoin saw minor outflows toiling $8.5 million and short-BTC investment products recorded outflows totaling $7.5 million, investment products focusing on smart contract networks saw significant inflows.

Ethereum, it adds, saw inflows totaling $16 million and is enjoying its seventh consecutive week of inflows totaling $159 million. The report adds:

We believe this turn-around in investor sentiment is due to greater clarity on the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake.~

The Ethereum Merge describes the network’s current mainnet merging with the Beacon Chain’s PoS system, setting the stage for future scaling upgrades, including sharding. The move is expected to reduce Ethereum’s energy consumption by 99.95%.

Tim Beiko, an Ethereum protocol support engineer at the Ethereum Foundation, made a projection the mainnet merge could occur in September at a PoS Implementers Call. Beiko has noted that the Merge timeline is very likely to change over time.

The report shows Ethereum rivals also enjoyed inflows, with Solana seeing $600,000 in inflows over the week, and Cardano seeing $200,000. Multi-asset investment products saw $1.1 million in inflows as well. Investment products focusing on $BNB notably also saw $100,000 in inflows.

Notably, as the Ethereum Merge approaches, some Ethereum miners are calling for a hard fork that will split the chain to maintain a network using PoW.

The move away from PoW is said to make the network cheaper, faster, and more environmentally friendly, however, it will also mark the end of an income stream for Ethereum miners who were being rewarded for securing the network.

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