Corporations To Acquire 10% Of Ether Supply As Regulatory Arbitrage Accelerates

Corporations are buying Ether at a faster pace than Bitcoin, signaling a shift in institutional interest toward the world’s second-largest cryptocurrency as it prepares to celebrate its 10th anniversary, according to a new report from Standard Chartered.

Corporate cryptocurrency treasury firms have bought up 1% of the total Ether supply since the beginning of June, the bank said in a Tuesday research report.

Over the same period, Ether-focused treasury firms have doubled the pace of investments compared to their Bitcoin-focused counterparts, helping ETH outperform Bitcoin’s price action, the report said.

As CoinTelegraph’s Zoltan Vardai reports, StanChart attributed some of Ether’s recent price strength to this accumulation trend and the performance of spot Ether exchange-traded funds (ETFs), writing:

“Buying by these companies, along with the best period for ETH ETFs on record, has certainly contributed to those gains.”

Standard Chartered added that continued inflows could push ETH above its $4,000 year-end forecast.

ETH held by Ethereum treasury companies. Source: Standard Chartered

Despite the increasing accumulation by corporations and US spot Ether ETFs, ETH’s price remains over 21% below its all-time high of $4,890 set four years ago in November 2021, data shows.

Corporations could reach 10% of all ETH

Ether-focused treasury firms have more growth potential compared to Bitcoin treasury firms from a “regulatory arbitrage perspective,” according to Standard Chartered.

“…this buying of digital assets by corporates makes sense due to inefficiencies in financial markets, mostly stemming from regulation.

Specifically, restrictions on investor access to the asset class, which remain significant in a large number of jurisdictions, mean that investors seek alternative vehicles (in this case publicly listed companies) through which to gain exposure to the underlying asset.

As a result, these companies’ market cap tends to trade above the net asset value (NAV) of the assets held, at a so-called positive NAV multiple.”

Ether treasury firms can “capture both staking rewards and decentralised finance (DeFi) leverage opportunities, which US Ethereum ETFs currently cannot,” the report said, adding:

At around 3%, staking yield is significant…

In the Bitcoin treasury space, it took several years for MSTR to spawn significant buying by imitators.

For ETH this is likely to happen more quickly, as the broader concept of corporate holdings of digital assets is already accepted.

Publicly listed Bitcoin mining company, BitMine Immersion Tech (BMNR), is currently the largest Ether treasury firm, holding 0.5% of the circulating ETH supply.

If BMNR can achieve its goal of increasing its ETH holdings to 5% of the total in circulation, then it is fair to assume that ETH treasury companies as a whole will end up holding more than 10% of all ETH in circulation. This would be a 10x increase from today’s corporate treasury holdings.

The firm previously announced plans to acquire up to 5% of the Ether supply, which would involve the acquisition of another 6 million ETH tokens, according to Standard Chartered.

Source: sassal0x

The report comes a week after a newly-formed company, called the Ether Machine, announced plans to launch “one of the largest onchain ETH positions of any public entity,” planning to acquire over 400,000 ETH worth more than $1.5 billion and to get listed on the Nasdaq under the ticker symbol “ETHM,” Cointelegraph reported on July 21.