The Flight of Institutional Investors to Stablecoins: ByBit Observes BTC and ETH Movement, Anticipating a Temporary Trend

The Rise of Stablecoins in Institutional Portfolios

A recent report by cryptocurrency exchange ByBit reveals the asset allocation trends of institutional and retail investors in the fourth quarter. The findings show that institutional traders had 45% of their assets in stablecoins, while Bitcoin (BTC) accounted for 35%, Ether (ETH) for 15%, and altcoins for only 5%. This risk-averse allocation can be attributed to the “flight” towards safer assets during bear markets. However, institutional traders did experience a spike in BTC holdings in September, which correlated with positive market sentiment and anticipation for potential SEC approval of a spot BTC ETF.

Different Holding Patterns Between Retail and Institutional Traders

ByBit’s report also highlights the disparity in asset holdings between retail and institutional traders. Retail traders had the lowest percentage of Bitcoin holdings compared to other user types, instead favoring stablecoins. While stablecoins still constituted a significant portion of institutional portfolios, their holdings started to decline. ByBit’s user base reached 20 million this year, solidifying its position as one of the top cryptocurrency exchanges globally.

Increasing Interest from Major Institutions

As Bitcoin prices continue to climb, major institutions are showing a growing interest. On December 4th, Brazil’s largest bank, Itau Unibanco, launched a BTC trading service for its clients through its investment platform.

Hot Take: The Surge of Stablecoin Allocation in Institutional Portfolios

The report by ByBit sheds light on the increasing prominence of stablecoins in institutional portfolios. During bear markets, institutional traders tend to allocate a significant portion of their assets to stablecoins due to their perceived safety. However, there are signs of shifting preferences as BTC holdings spiked among institutional traders in September. As the crypto market evolves, the allocation strategies of institutional and retail investors will continue to shape the industry’s landscape.