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Institutions flocking to Ethereum for 7 straight weeks as merger approaches: Report

Institutional investors are piling into Ether-based digital asset funds, which have recorded seven straight weeks of positive inflows, according to the latest CoinShares report.

Said inflows reached $16.3 million last week, adding to a total of $159 million over the past seven weeks.

CoinShares head of research James Butterfill said on August 8 that the increase in market sentiment for Ethereum-focused products is largely due to “greater clarity” surrounding the upcoming merger, which is set for September 19, with Butterfill saying:

“We believe this turnaround in investor sentiment is due to greater clarity about the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake.”[ads1];

The merger will see the Ethereum Mainnet merge with the Ethereum 2.0 Beacon Chain, which will complete the transition from proof-of-work (POW) to a proof-of-stake (POS) consensus mechanism. The POS consensus mechanism is expected to make Ethereum more secure, energy efficient and environmentally friendly.

The Goerli and Prater testnet merge is also expected to take place this week, which will be the last scheduled general test before the mainnet Merge takes place in less than six weeks.

Traders gear up

Blockchain research firm Glassnode suggested that the highly anticipated merger has crypto traders preparing to “buy the rumor and sell the news.”

“Derivatives traders are placing directional obvious bets for Ethereum, specifically related to the upcoming merger planned for September 19.”

In a newsletter titled “Betting on the Merge” on August 8, the research firm noted that post-Merge, the ETH options and futures market is positioned in “backwardation” – a situation where the current price of an asset is higher than the prices traded in the futures market .

“Both the futures and options markets are in decline after September, suggesting that traders expect the merger to be a ‘buy the rumour, sell the news’ and have positioned themselves accordingly,” the firm said.

Related: Ethereum options data shows pro-traders poised to go long into ETH’s rally

However, the jury is still out on how the merger will ultimately affect Ethereum’s price. In a recent interview, Ethereum founder Vitalik Buterin remained optimistic about ETH’s long-term prospects, saying the narrative is likely to remain positive post-merger — as an aspect that has yet to be priced in.

“When the merger actually happens, I expect that morale is going to go way up. I basically expect that the merger is not going to be priced in, and by that I don’t even just mean in market terms, but even in psychological and narrative terms. I in narrative terms, I think it’s not going to be priced in quite a lot until after it happens.”

The price of Ethereum is $1,776 at the time of writing, up 8.6% over the past seven days, according to data from CoinGecko.