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Institutional Investors Boost Allocation to Cardano and XRP Amid Price

16-Jun-2022 By: Shikha Jha
Institutional Invest

Institutional Investors Boost Allocation to Cardano and XRP Amid Price

Fluctuations Investors are boosting their digital asset allocations to Cardano, XRP, and Polkadot at the expense of Ethereum, according to the CoinShares Digital Asset Monthly Fund Manager Survey.

The digital assets were added to investors' portfolios for a variety of reasons, including speculative motivations, high value, and the rise of Distributed Ledger Technology.

A multitude of variables, ranging from speculation and investor attitude to recent development efforts across the different blockchains, might be related to the greater investor interest in Cardano and XRP compared to ETH.

Speculators may be enticed to channel their asset allocations towards Cardano and XRP because of the stronger potential gain to the ATH price of these digital assets compared to ETH, although over the long term.

Ethereum was designed to be an open-source platform that could be used to develop new apps on top of it. Ethereum got a head start over other blockchains since it was the first to introduce smart contracts. As a result, the Ethereum platform has seen remarkable growth in terms of transaction volume throughout the years. The platform's scalability issue, on the other hand, resulted in increased gas prices, especially during busy network hours. Another problem of the Ethereum network was its lack of compatibility between blockchain systems.

The so-called "Ethereum Killer" blockchains were created as a result of solutions to the aforementioned problems. Competitor blockchains were quickly built to address the Ethereum platform's shortcomings. Cardano and Polkadot, to mention a few, were among these blockchains. On these blockchains, a lot of innovations have occurred.

In September 2021, the Cardano Network's Alonzo Upgrade enabled fully functioning smart contract functionality, permitting the minting of NFTs and the execution of many Decentralized Applications. These advancements have made the Cardano ecosystem a direct rival to the Ethereum Network, with quicker speeds and reduced transaction fees. The increased transaction costs and scalability issues are likely to have led to investor funding moving into Cardano rather than Ethereum.

The Polkadot environment, according to the Electric Capital Developer Report 2021, was one of the largest and fastest-growing ecosystems, with over 250 active monthly developers. At the same time in history, the Polkadot ecosystem was said to be developing faster than the Ethereum Network. In contrast to the Ethereum Network, this might have affected the flow of investor capital into the Polkadot ecosystem.

Since late 2020, Ripple has been embroiled in a legal dispute with the US Securities and Exchange Commission, with the SEC alleging that Ripple sold its XRP coin in an unlawful securities offering. The early court verdicts look to be in Ripple's favor, indicating that the fight against the SEC will be won. Speculators believe that if Ripple wins its lawsuit against the SEC, the price of XRP would rise. As a result, investor trust in XRP has increased.

Should we anticipate more Ethereum funds to be transferred to Cardano, Polkadot, and XRP? The contest to become the most popular blockchain is heating up. Developer engagement on blockchains is only anticipated to increase as they become more reliable and effective.

The average ETH transfer gas fees decreased below $3 per transaction in May 2022, a ten-month low. Though this is good news for Ethereum Network users, it is unclear how long the current gas fee level will last. Some crypto experts believe the decrease in gas fees is due to the recent broad bear market in the cryptocurrency market, which has resulted in fewer transactions on the ETH network.

The long-awaited ETH Merge Upgrade will take place in August 2022, according to Vitalik Buterin, co-founder of Ethereum. Ethereum would switch from a PoW to a PoS consensus method as a result of the update. The Ethereum Merge Upgrade might provide the Ethereum Network the much-needed boost it needs to maintain its first-mover advantage over rival blockchains.


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