Institutional Investors Turn To Competitors As Ethereum Tumbles


As the crypto market has taken a turn for the worse, institutional investors are phasing out their investments in Ethereum. The digital asset has been the victim of multiple outflows that have reduced total assets under management (AuM) and this trend has continued this week. Instead of switching to a bigger competitor, Bitcoin, institutional investors are now switching to networks in direct competition with Ethereum.

Big Money Leaves Ethereum for Algorand

Algorand is one of the main competitors to Ethereum that has been making waves in the field of decentralized finance (DeFi). As a result, more institutional investors are choosing to pitch their tent with the smart contract platform. This has led to institutional investors moving from Ethereum to competitors like Algorand.

Related reading | Cardano TVL jumps 30% in 24 hours as it recovers to $155 million

Data from last week shows that while Ethereum continues to slip away from the big money, Algorand was right behind him to absorb all the flow. This has resulted in DeFi protocol streams reaching $20 million. It is a new high for a digital asset and is evidence of the growing interest in other DeFi protocols besides Ethereum.

For a leading smart contract platform, outflows continue to destabilize assets. It saw a total of $11.6 million leave last week. This has brought its outflows to date to a staggering $250 million. Compared to other digital currencies, Ethereum has fared worse among institutional investors.

Ethereum price chart from TradingView.com

ETH trading below $2,000 | Source: ETHUSD on TradingView.com

These other digital currencies, which also happen to be DeFi protocols, also posted inflows this year. Solana and Tron managed inflows of $1.8 million and $0.4 million respectively, indicating that big money is still bullish on these altcoins.

Not so bad a week

As for the other coins in the market, last week proved to be not bad. For example, inflows into Bitcoin amounted to $69 million. It may not be as high as other weeks of inflows have been, but it says a lot about how institutional investors are looking at the market even through the current downtrend. Last week’s inflows brought bitcoin inflows to date to $369 million, unlike Ethereum, which has been dominated by outflows.

One thing to note though is that BTC’s AuM has dropped to its lowest point since July 2021. This is not a direct result of institutional investors not putting their money into bitcoin. Rather, it is due to the depreciation of the digital asset over the past two weeks.

Related reading | Bitcoin Dominates Derivatives Market to End High in May

Other vehicles also enjoyed influxes. Multiple assets have always been a favorite of institutional investors, and this shines through even in a bear market with total inflows of $4.8 million last week. Bitcoin short flows have also reached $1.8 million.

Across the pond, the European market is beginning to see a light at the end of the tunnel. After more than a month of continuous outflows, inflows into Europe reached $15.5 million. However, North America continued to dominate with total inflows of $72 million.

Featured image from CryptoSlate, chart from TradingView.com

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