Institutions have a framework to understand Ethereum

1} Fidelity Digital Assets just released an investment thesis on Ethereum which is very interesting,

Here are my 3 important takeaways:

1} Ethereum may be best understood as a technology platform that uses ether (ETH) as a means of payment

There are two investment thesis that they mention:

1. Considers demand and supply side dynamics of Ethereum network and token, store of value and use of ETH as a method of transaction

   

2. Much like stock buybacks, staking Ethereum can provide cash flows in terms of yields generated on network usage

Let’s see what I mean:

2} Ethereum’s perceived value is tied to a. Network usage b. Supply and demand dynamics

Both have changed since "The Merge" where total supply of ETH tokens varies as per demand for blockchain (Net deflationary since last 1 year)

Ether’s overall platform usage may pass value on to token holders, whereby increased usage of the Ethereum network and platform leads to value accrual to ETH- The Token

3} Ethereum’s switch to proof-of-stake now lets token holders receive yield.

As a yield-generating asset, ether’s value can be examined through a DCF model giving a fair idea to institutions before investment

The global cryptocurrency market cap today: $1.13 Trillion

Daily change: 0.31% | Yearly change: 15.77% 

Bitcoin (BTC) is the largest cryptocurrency with a market cap of $544 Billion.

Weekly change: 2.90% | YTD change: 68.01%

Another important metric is Bitcoin dominance which can be used as a rough indicator of the relative strength of Bitcoin versus other cryptocurrencies. A high Bitcoin dominance means that Bitcoin has a large market share and is potentially more influential in the overall cryptocurrency market and vice-versa.

Bitcoin dominance: Current Year: 49.87% | Last year (Oct 2022): 39.98%

The market sentiment has gone back to fear levels now expecting “Sell Off” this month

Note: The data used is based on metrics like Volatility, Surveys, Bitcoin Dominance, Social and Google Trends. Source: Coinstats

Let's have a look at Ethereum supply changes post its merge to a PoS blockchain from PoW.

The significance of the chart - understand how the supply of Ethereum is decreasing post the merge, which means “deflationary economics” for the Blockchain

Supply change since merge POS -283,827 ETH

The graph highlights POS issuance since the merge. Impressive numbers, look super bullish for ETH long term given the supply of ETH is not growing as before

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And now the funny/cool part, well this one is important fosho

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research