Cryptocurrency exchange Bybit highlights optimistic growth forecasts for the value of ETH following the Dencun upgrade on the Ethereum blockchain.
Institutional investors are showing optimism driven by expectations of the update, Bybit research reports.
Dencun is due on March 13 and will include the Ethereum Improvement Proposal (EIP), including proto-danksharding. This should ultimately reduce Level-2 transaction costs for developers.
The exchange report states, "While the upcoming upgrade is unlikely to have the same effect as Merge (Ethereum's big merger), it is likely to provide a tailwind for ETH and other Level-2 tokens."
The last Ethereum Shapella upgrade, in April 2023, was a major event for the crypto asset that had an immediate impact on the value of ETH. Thanks to Shapella, ETH token validators were able to get their assets out of the stakes.
Bybit reports that since September 2023, Ethereum has shown optimistic investor sentiment, and in January 2024, it increased significantly to about 40% of institutional portfolios.
An additional positive stimulus for ETH price growth is cited as the possible imminent launch of spot Ethereum ETFs, which may be approved by the SEC in the near future.
Bybit notes that funds and institutional investors reduced their Bitcoin reserves ahead of the launch of the BTC ETF in early December 2023. At that time, Bitcoin tested the critical resistance level of $40,000, and investors' assets in Bitcoin continued to shrink. Experts believe that this could be both a short-term tactical preparation and a medium-term strategic reallocation of assets.
We should also take into account that in April 2024, Bitcoin expects the procedure of halving the reward per mined block. Usually, after the halving, there is a significant increase in the value of BTC after some time. Therefore, the upcoming halving is a positive influence on the crypto asset.
The Bybit study also provides information about the asset allocation of investors. From July 2023 to January 2024, institutional investors have invested 40% in Bitcoin, 40% in Ether, 15% in stablecoins, and 5% in the remaining altcoins.
Bybit notes that funds and institutional investors are shifting the focus of their portfolios to Bitcoin and Ether from 50% to 80%. In contrast, retail users are less focused on Bitcoin and Ether, with only up to 35% of their portfolios.
"The investment preferences of retail users differ from those of institutional investors; they lean more towards altcoins," the study found. Large investors have significantly reduced their overall positions in altcoins – by half in percentage terms. They closed all positions in highly volatile tokens such as meme tokens, AI, and BRC-20.
Also, retail users show more confidence in Bitcoin compared to Ether.
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