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Seeking Alpha 2023-01-29 21:27:00

Ethereum expected to shine the most among cryptos, including bitcoin, survey says

Investor sentiment towards ethereum ( ETH-USD ), the largest alt-coin by market cap, has seen a “dramatic rise” so far in 2023, coinciding with the astounding year-to-date rally across the broader cryptocurrency market. By contrast, investors have dialed back their growth outlook for bitcoin ( BTC-USD ). Since the start of 2023, following the crypto rout in the previous year, both ether ( ETH-USD ) and bitcoin ( BTC-USD ) have seen immense buying pressure, climbing 31% and 39% , respectively, as of Friday afternoon. Also, the tokens recently erased their losses since the November 2022 implosion of crypto exchange FTX ( FTT-USD ), an abrupt event that roiled the market and tarnished the industry’s reputation. Despite bitcoin’s ( BTC-USD ) YTD outperformance versus ether ( ETH-USD ), a record 60% of investors believed ETH has the most compelling growth outlook, according to a CoinShares survey conducted between Dec. 29, 2022 and Jan. 23, 2023, up from 40% in the October 2022 survey. On the other hand, some 30% of respondents viewed bitcoin ( BTC-USD ) as the most attractive going forward, down from nearly 40% previously. Last week, CoinShares noted weekly inflows for investment products that allow investors to bet on lower bitcoin ( BTC-USD ) prices hit the highest mark since July 2022, while products that wager on higher ether ( ETH-USD ) prices saw solid inflows. That dynamic underscores the bearishness in bitcoin relative to ether. Overall, the survey, which consisted of 43 responses from investors who cover $390B of assets under management, indicated that digital assets weighting in investment portfolios represented 1.1% of portfolios, having risen from the previous 0.7% reading. Investors cited both speculation and exposure to distributed ledger technology as the key reasons behind taking stake in digital assets. Like all asset classes, digital assets carry certain risks, with the two biggest ones being increased regulation and a government ban, “although far few expect political blockers and a government ban,” CoinShares said. “This suggests investors see regulation being the solution rather than an outright ban.” The survey also found a big rise in concerns over the custody of digital assets, which makes sense given FTX’s ( FTT-USD ) collapse (and its contagion effects) was said to have triggered the U.S. Securities and Exchange Commission to intensify its scrutiny of registered investment advisors who directly or indirectly have custody of client crypto assets. Vincent Gusdorf, senior vice president, head of DeFi and Digital Assets Analytics at Moody’s Investors Service, expects bitcoin ( BTC-USD ) and ether ( ETH-USD ) to dominate the crypto landscape in 2023 “as investors seek more established assets,” he said in a recent report. “Tighter financial conditions and the possibility of new frauds will hinder the recovery of crypto asset markets. However, innovation and the introduction of regulatory frameworks in several territories will provide a better operating environment.” Seeking Alpha contributor The Digital Trend took note of bitcoin’s ( BTC-USD ) recent rally and market participants’ calls for a bottom, but remains skeptical.

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