Institutional investors are prioritizing Bitcoin over Ethereum in 2023. The report was published by the digital asset analysis firm Arcane Research. According to the research firm, the open interest of Bitcoin futures climbed 6% in Chicago Mercantile Exchange (CME), while Ethereum’s future has declined by more than 25% in the last month.
The data from this report suggests institutional investors are prioritizing Bitcoin exposure in their portfolio because of Ethereum’s future upgrades on the mainnet, which has a risk in the long term.
Retail investors may think the future upgrade of Ethereum will make the technology more sustainable in the long run, and Bitcoin’s proof of work consensus may not be a sustainable choice, but institutional investors’ behavior suggests exactly the opposite. They are speculating on the risk associated with ETH due to changes in running algorithms and updates. The recent trend of open interest in 2023 deviated from the normal trend of CME’s futures.
As a result, we can find a short-term rally in crypto markets, which is led by BTC, when institutional investors seeking Bitcoin exposure in early January find an excess risk of adding altcoins exposure.
Besides Bitcoin, the other small-cap altcoins showed tremendous growth that suggested increased risk appetite of the retail investors, as well as a combination of poor liquidity and short squeezes, which pushed the price up for small-cap altcoins. So, will the crypto market rise again? Explore our best crypto forecast before you start investing. It will help you to decide whether it is a concern to keep your hard-earned money in those assets for the long term.
Overall, the Arcane Research firm suggests retail and institutional investors prefer BTC over ETH in their portfolio for the long term, which makes ETH a relatively weak cryptocurrency in 2023.
However, Ethereum is the second largest one based on the market cap of the crypto industry, and ETH price has been consolidating for the short term.