Institutional Investors Bullish On Ethereum Despite Market Struggles

• Institutional investors are increasing their long positions in Ethereum futures, suggesting they view ETH as currently undervalued and potentially ready for a price surge of up to 22%.
• Despite Ethereum underperforming compared to Bitcoin and Solana, large trading firms including dealer firms have boosted their ETH futures holdings by 336% since November.
• The Ethereum Foundation’s development priorities have been criticized for focusing on research over speed and lower transaction fees, contributing to ETH’s 32% price decline over the last three years. Institutional traders are betting on an Ethereum comeback, according to recent Commodity Futures Trading Commission (CFTC) data. Despite ETH’s price stagnating around $2,068 in recent weeks, large financial players are positioning themselves for a potential upswing, with futures data suggesting a possible 22% price increase to approximately $2,400.

Analysis of the latest CFTC Commitment of Traders (COT) report reveals that institutional investors have been building long positions in Ethereum futures over the past several weeks, viewing the current price as oversold. This “smart money” movement has historically preceded price rallies in the spot market, offering a potential indicator of Ethereum’s future trajectory.

Since 2023, an average of 38 large firms have maintained long positions in ETH futures, compared to 74 firms holding Bitcoin futures. This institutional interest is notable considering Ethereum’s underwhelming performance – while Bitcoin has more than doubled over the past three years to its current $82,244 value, Ethereum has declined by 32%.

Citadel Securities, Susquehanna International, and Jane Street Capital are among the major institutions actively trading in cryptocurrency markets. While the COT report doesn’t identify specific firms, it categorizes trading activity by entity type, showing a significant increase in dealer participation.

Bank-owned dealer firms, which include swap dealers and futures commodities merchants, have increased their ETH futures contracts by an astounding 336% since early November, growing from approximately 3,500 contracts to over 15,000 currently. This surge coincided with President Trump’s election, which triggered broader investor interest in cryptocurrencies.

The COT report, published weekly since 2018, aims to bring transparency to cryptocurrency trading behaviors, capturing institutional positioning in derivatives markets. Leveraged firms, including liquidity providers and quantitative trading operations, typically serve as counterparties selling futures contracts to dealer firms.

ethereum’s price struggles stem partly from community dissatisfaction with the Ethereum Foundation’s development priorities. According to Rob Hadick, General Partner at crypto venture firm Dragonfly, “The level of underperformance [of ETH] relative to BTC and SOL clearly shows that the market is concerned about the relative performance of ETH from here, which is primarily due to concerns about value accrual, protocol revenue and fees, especially since L2s are ‘parasitic’ to L1 chains.”

Hadick further noted, “In addition, there’s a general lack of confidence in the Ethereum Foundation’s claims that they will ship meaningful upgrades after a number of failed promises.”

Despite these concerns, Hadick sees opportunity in Ethereum, stating, “Ethereum still has an overwhelming advantage in terms of the notional value of TVL, value secured, stablecoins, and RWAs. There is time and potential for them to utilize that advantage to spur more economic activity and reverse the trendline. But, the time is now.”

Ethereum futures growth has continued into 2025, with 11,819 contracts added last year and another 2,700 contracts added year-to-date. This sustained interest indicates that institutional participants are committing significant capital – hundreds of millions to billions of dollars – based on the expectation that Ethereum demand will increase and its price will recover from current depressed levels.

A brief surge in Ethereum’s price occurred in October 2024 during ETH San Francisco, driven by optimism that the Ethereum Foundation might become more responsive to community needs. However, prices have since retreated to late 2023 levels as the Foundation continues to prioritize research-driven initiatives focused on core values like open source development, privacy, security, and censorship resistance rather than the speed and transaction cost improvements many developers have requested.

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