A report published by the cryptocurrency exchange Bybit has shed light on institutional investors’ portfolio preferences and emphasized their strategic moves. The report highlights a significant shift in asset allocation, especially in the realms of Bitcoin (BTC) and Ethereum (ETH), focusing on the changing market sentiments of institutional investors.
Institutional Investors: An Overview of Crypto Portfolios
Throughout the research period, institutional investors exhibited a well-diversified crypto portfolio. Notably, 45% of their assets were held in stablecoins. 50% were strategically allocated to the ever-dominant Bitcoin and Ethereum, while the remaining 5% were distributed among altcoins. This balanced distribution reflects the cautious yet opportunistic approach of institutional investors.
The notable increase in Bitcoin assets marked the first three quarters of 2023 for institutional investors. In September, in line with the general positive market sentiment towards Bitcoin, institutions allocated 50% of their asset portfolios to BTC. This increase could be attributed to optimistic outcomes in legal battles and could fuel expectations for the potential approval of a spot Bitcoin ETF by the SEC.
While the holding percentage of Ethereum increased at the beginning of the year with the anticipation of the Shapella update in April, it experienced a decline after Shapella. However, an unusual increase in the Ethereum holding percentage was observed among institutional investors from September onwards, indicating a clear positive sentiment towards crypto assets.
There is a clear distinction in stablecoin dynamics between institutional and individual investors. Individual investors, influenced by leverage practices, consistently maintain the highest percentage of stablecoins.
On the other hand, institutional investors showed a decrease in stablecoin percentages during bear markets and an increase during bullish phases. This indicates their mastery of market timing.
Institutional Optimism Amidst Market Trends
In September, there was a sharp decline in the percentage of stablecoins held by institutional investors, while there was a notable increase in BTC and ETH percentages. If this trend continues, it may indicate sustained optimism about the market direction among institutions. Nevertheless, institutions continue to exhibit a cautious stance regarding altcoins, with holding percentages showing a steady decline.