Institutional Investors Favor Ethereum as $1 Billion Pours into Crypto Markets in May, Reports KuCoin Research

• The KuCoin exchange’s research division has released a report detailing cryptocurrency investment trends for the month of May, indicating a minor decline in new investments compared to April.
• The report emphasized that during this period, institutional investors primarily focused on Ethereum and platforms utilizing Ethereum Virtual Machines (EVM).
• Notably, the report also shed light on key trends and favored sectors that are shaping the current investment landscape in the cryptocurrency arena.

KuCoin’s latest report reveals $1 billion in new crypto investments for May, highlighting sustained institutional interest in Ethereum and EVM platforms despite a slight month-over-month decline.

$1 Billion in New Crypto Investments

KuCoin Research has published observations reflecting that in May, the crypto sector witnessed public disclosures of approximately 156 investment deals, culminating in a total investment of around $1.02 billion. This figure represents a 6.4% decrease from April’s $1.09 billion but shows a notable year-over-year increase from May 2023’s disclosed investments of $905 million. This persistent capital influx underscores the industry’s ongoing appeal and growth potential.

According to the report, more than half of these 156 projects received financing between $1 million and $10 million. Ethereum, along with other EVM-compatible chains and Layer 2 solutions like Arbitrum and Polygon, captured significant institutional interest. Outside of the EVM ecosystem, Solana was the frontrunner, followed by Bitcoin, Fantom, and TON, which were also listed among the top 15 networks receiving investor attention.

Major Chinese institutions have notably remained active in the investing sphere, engaging heavily in funding emerging technologies and public chain networks. Animoca Brands, for instance, participated in 15 different deals, while OKX was involved in 11 projects. Other key players included Cogitent Ventures, SNZ Holdings, DWF Labs, Polygon Ventures, MH Ventures, Haun Ventures, Waterdrip Capital, and GBV Capital, all contributing significantly to investment activities.

Key narratives driving institutional investments included modularity, Layer 2 solutions, and liquid staking derivatives (LSD). The report also noted a strategic inclination among institutions toward public listings for project exits. This trend was apparent as the proportion of Series A financing projects dropped from 10% to 7.77%, with an increase in strategic financing projects from 15.73% to 18.45%.

Significant Shifts in Investment Focus

The report highlighted a notable shift in investor focus towards meme coins, celebrity tokens, emerging narratives, and low market cap assets. Projects with high initial valuations and limited supply drove investors to diversify their portfolios with alternative crypto assets. This shift saw meme coins like Notcoin gaining significant traction among investors.

Additionally, the report outlines how recent regulatory changes in the United States have reshaped the legal and operational framework within the crypto market. These regulatory updates have presented new challenges for investors and market participants, compelling them to adapt their investment strategies accordingly.

Conclusion

KuCoin’s research highlights continuing positive sentiment in the crypto investment landscape, despite a slight drop in month-to-month investment totals. Institutional investors are progressively leaning towards Ethereum and EVM-compatible projects, with significant activity evident from major Chinese institutions. Shifts in investment preferences towards alternative, low market cap assets and evolving regulatory environments add layers of complexity to the market dynamics. The persistent influx of capital underscores the industry’s growth potential and evolving directions.