20.10.2021

CME Ethereum Futures Launch Legitimizes ETH to Institutional Investors

Ethereum is Undervalued Relative to Bitcoin. Also in the January investor letter, the team at Pantera Capital pointed out that Ethereum is undervalued relative to Bitcoin.

The team explained that Ethereum is the leading smart contract network that has ushered in the revolutionary DeFi industry. This fact alone showcases the unlimited potential of Ethereum. They explained:

Ethereum is the leading asset in the cryptocurrency space for developers who want to write smart contracts and decentralized finance (DeFi) applications. It’s the base money collateral for this new financial system.

On Ethereum, DeFi has grown from $1bn in Jan 2020 to $16bn in Jan 2021, has more fees paid than Bitcoin, trades at an implied P/E multiple of 79, is down 14% from its all-time high, and we believe is undervalued on a relative basis to Bitcoin.

Quick take:

  • Pantera Capital believes that the launch of the CME Ethereum futures legitimizes ETH to institutional investors
  • Staking on Ethereum 2.0 provides less sell pressure for ETH
  • Ethereum has kicked off 2021 on a bullish note that could continue throughout the year

The launch of the CME Ethereum futures is less than three weeks away and the team at Pantera Capital believes that the launch will legitimize ETH to institutional investors. This is according to the firm’s January investor letter which also explains that the progress and staking on Ethereum 2.0, provide less sell pressure on the price of ETH.

Below is an excerpt from the January investor letter highlighting the above two fundamental factors governing the potentially bullish future of Ethereum.

…once CME ETH futures launch, it legitimizes Ethereum as something institutional investors can own, and it’s actually a fairly easy bucket for them to allocate to (it fits in their tech disruption buckets).

And as more and more holders stake their ETH in Ethereum 2.0, that locks up Ethereum, which means less sell pressure on the price.

These two things, combined with the fundamentals and historically low valuation relative to Bitcoin, should provide a lot of positive pressure on Ethereum’s price in 2021, and for that reason we’re very bullish on Ethereum.

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