Ethereum becomes a new darling of institutional investors

Ethereum (ETH) is trading at $594 at the time of writing. The second-largest digital asset with the current market capitalization of $67 billion and an average daily trading volume of $12 billion has stayed mostly unchanged in the past 24 hours and gained 3.5% on a week-to-week basis. 

The coin hit a new multi-year high at $641 on December 1 before profit-taking pushed it back to the psychological barrier of $600, however, fundamental and on-chain metrics imply that the bullish run is not over yet.

Institutional investors turn to ETH

The second-largest digital asset has caught the eye of Institutions and high-wealth individuals. According to Michael Sonnenshein, managing director at Grayscale Investments LLC, an Ethereum-based trust has been gaining popularity recently. Speaking in an interview with Bloomberg, he said:

Over the course of 2020, we are seeing a new group of investors who are Ethereum first and, in some cases, Ethereum-only. There's a growing conviction around Ethereum as an asset class.

Ether's success among institutional investors is based on strong fundamentals. First, the decentralized finance (DeFi) industry is the hottest and the most exciting thing in the crypto universe this year. Ethereum blockchain retains the leadership status as the overwhelming majority of DeFi projects are based on Ethereum blockchain. The growing network activity leads to increased ETH transaction fees and strong demand for the coin.

Second, ETH successfully launched its Beacon Chain, the first mainnet of a totally new and scalable Ethereum 2.0. While the full transition will be completed in about two years, investors are enthusiastic about the launch as it signifies a new chapter in ETH evolution.

Finally, Ether is up about 360%, while Bitcoin has gained only 170%. The stellar profitability is another factor behind the growing investment interest in the digital asset. 

Ethereum price forecast: Enormous resistance around $600

IntoTheBlock's "In/Out of the Money Around Price" model shows that ETH bulls face a brick wall around $600 over 900,000 ETH addresses purchased over 9 million coins around that price. If it is broken, Ethereum's upside momentum will start snowballing as there are no significant barriers until $680-$700.

ETH In/Out of the Money Around Price

On the other hand, the way to the south is less cluttered with barriers at this stage. The first support area on approach to $550 may slow down the sell-off. However, if it is absorbed, the downside momentum may gain traction and push the price towards the psychological barrier of $500.