Billion dollar crypto fund Valkyrie, eliminates all exposure to Ethereum ahead of merger

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(Kitco News) – One of the most active conversations in the crypto world right now is how to play the market as it approaches the long-awaited Ethereum Merger, which is expected to begin on September 6th.

On one side, there are the crowd who believe that the merger will usher in a new era for Ethereum along with a new bull market cycle, while others see the event as a “buy the rumor, sell the news” event that will plunge prices. back into bear market territory.

It appears that crypto-focused fund Valkyrie Investments, which has roughly $1 billion in assets under management, is not willing to take any chances and has exited all of its positions in the second-ranked digital asset.

This revelation came during an interview with Bloomberg Technology when Steve McClurg, Valkyrie’s Chief Investment Officer, said that the crypto asset manager has opted to take a flight to safety with assets like Bitcoin (BTC) as the merger approaches.

“Right now, Bitcoin is really the security for a lot of our funds … some of the more established proof-of-stake protocols are also a great place to be. Places like Avalanche and Zilliqa,” McClurg said in the interview. “So we’re moving really get us out of anything that has too much exposure to ETH right now until we see this merge sometime in [the] the middle [of] September and into some of the more secure major crypto protocols.”

As for why the firm is taking a step back from Ethereum-related investments, McClurg pointed to the trade-offs that come with moving to a proof-of-stake (PoS) consensus mechanism, which can pose significant risks to investors.

“I don’t necessarily think that a move to proof-of-stake is a big thing for Ethereum in the short term. In the long run, it might actually work out, McClurg said. “But the Ethereum network is actually more secure as proof of work.”

McClurg pointed to Bitcoin in defense of this position, asserting the security offered by a global decentralized network of miners.

“What really makes Bitcoin the most secure network is a long period of time through proof-of-work where you essentially have computers or validators validating transactions all over the world in a decentralized way. When you move to proof-of-stake, it really falls into the hands of a few.”

As for what it will take for the asset manager to re-enter their Ethereum positions and trust the new PoS system, the CIO suggested that the network’s security will have to prove itself before investors will feel confident enough to hold large amounts of value in the chain again.

“But in relation to [how] Ethereum is going, the security has to be seen, how it is going to work. Because we really think that if you have a million-dollar-plus NFT and you’re relying on the Ethereum network and it’s changing right now, maybe that’s not a great place to be right now.”

At the time of writing, Ether is down 1.15% on the 24-hour chart and is trading at a price of $1,688. Ethereum dominance is at 19.7%.