Recently, there has been significant movement in the financial sector—institutions are going crazy 'scooping up' Ethereum (ETH) as if they have discovered a new continent. What is truly behind this wave of action?
Why are institutions focusing on Ethereum?
1. The Temptation of Blockchain 'Infrastructure'
Ethereum is not an ordinary cryptocurrency; it is the world's largest smart contract platform, equivalent to the 'operating system' of the blockchain world. Over 70% of global DeFi (decentralized finance) applications, NFT (digital collectible) transactions, and even games and supply chain finance run on Ethereum. Institutions see its status as the 'infrastructure' for the future digital economy—if they don't position themselves now, it might be too late when the ecosystem fully explodes.
2. Upgraded 'Hard Power'
In the past two years, Ethereum faced criticism for slow transactions and high fees, but in 2022, it completed the 'Merge', switching from energy-intensive 'Proof of Work' (PoW) to the more environmentally friendly 'Proof of Stake' (PoS). This upgrade directly reduced energy consumption by 99.95%, increased transaction speed, and supported sharding technology (which can further enhance throughput in the future). Institutions feel that the technological shortcomings have been addressed, leading to a more stable long-term value.
3. Signals of Regulatory 'Loosening'
In 2024, the U.S. SEC (Securities and Exchange Commission) finally relented and approved the launch of an Ethereum spot ETF. This means institutional investors (such as pension funds and hedge funds) can invest in ETH through compliant channels just like buying stocks, without worrying about 'crossing red lines'. Once the policy is opened up, funds naturally flock in—data shows that in the first week of the Ethereum ETF launch, net inflows exceeded $1 billion, with institutions being the main buyers.
Who is going crazy buying? How are they doing it?
1. Traditional Financial Giants 'Entering the Game'
Wall Street veterans like Blackstone and BlackRock have long set their sights on Ethereum. For instance, BlackRock, which manages over $9 trillion in assets, launched an Ethereum spot ETF directly in 2024 and has called it 'Digital Gold 2.0', attracting a large number of institutional clients. Goldman Sachs and Morgan Stanley have also been active, with some helping clients custody ETH and others directly developing Ethereum-related derivatives, leading to an increasing variety of strategies.
2. Tech Companies 'Hoarding Coins' for Defense
Tech giants like Microsoft and Meta are quietly hoarding ETH. They are not focused on short-term speculation, but rather on Ethereum's 'versatility'—the potential need for ETH as 'fuel' in future digital identities and enterprise-level blockchain applications. For example, Microsoft's Azure cloud service has long supported Ethereum node deployment, making it convenient for future plans.
3. Sovereign Funds 'Testing the Waters'
Even sovereign wealth funds from countries like Singapore and the UAE have started to allocate small amounts of ETH. Their logic is simple: to diversify risk. Traditional assets (stocks, bonds) have low correlation with cryptocurrencies, and adding a bit of ETH can optimize the risk-return ratio of their investment portfolios. Of course, the current proportion is still small (usually less than 5%), but the breakthrough from '0 to 1' is more significant.
Behind the frenzy: What are institutions betting on?
On the surface, institutions are buying ETH, but in reality, they are betting on the overarching trend of 'blockchain technology reshaping finance'. They believe that in the next decade, decentralized finance will capture a portion of traditional finance's market share, and Ethereum, as the largest ecosystem, will inevitably be a core beneficiary. Just like those who invested in internet infrastructure (such as fiber optics and data centers) 20 years ago made significant profits, institutions do not want to miss the opportunity of the 'blockchain version of the internet'.
Can ordinary investors follow suit?
The institutional frenzy is indeed a signal, but don't follow blindly. ETH is highly volatile (it has risen 80% from 2024 to now, but it also previously dropped 70%), so ordinary investors must consider their risk tolerance. If you want to participate, pay attention to two points: first, policy dynamics (such as more countries approving ETFs), and second, Ethereum ecosystem advancements (like the implementation of sharding technology and new applications emerging). Remember, institutions have professional teams and long-term funds, so we must act within our means.
The institutional frenzy for Ethereum is essentially a battle for future financial discourse power. Regardless of the outcome, blockchain technology is transitioning from 'marginal experiments' to 'mainstream applications', which may be the most noteworthy trend.