In a revealing new report issued by Bybit, the globally recognized crypto exchange, a unique insight into investor behavior post-Bitcoin spot ETF approval this January has been provided. Titled “Navigating Bull and Bear Markets, A Dive Into User’s Asset Allocation,” the document outlines the shifting sands of asset allocation among institutional and retail investors, signaling a divergent approach towards cryptocurrency investments.
According to Bybit, currently ranked among the top three worldwide in terms of trading volume, there has been a significant pivot among institutional investors towards Ethereum (ETH). Data culled from the exchange indicates that by the end of January 2024, approximately 40% of institutional crypto allocations were in ETH. This marked increase is speculated to be largely in anticipation of Ethereum’s forthcoming Dencun upgrade, highlighting institutional investors’ growing confidence in Ethereum’s future prospects.
On the flip side, retail investors exhibit a different pattern of allocation, demonstrating a conservative approach with 20% of their cryptocurrency investments in BTC and 10% in ETH. Interestingly, retail investors appear to favor stability, with 36% of their portfolio in stablecoins, contrasting sharply with institutions that seem to be more invested in the market’s growth potential, maintaining only about 10% in stablecoins.
Navigating Crypto Allocations
A deeper dive into the altcoin market reveals a joint trend of de-escalation among both investor types, with a noticeable retreat from highly volatile assets such as meme, AI, and BRC-20 tokens in January 2024. This shift comes despite the lucrative returns these assets offered in the preceding months, indicating a more risk-averse stance entering the new year.
Furthermore, the Bybit report sheds light on the waning institutional interest in Ethereum’s Layer 2 projects. While there has been a reduction in the average dollar value of Layer 1 (L1) assets held by institutions, this pales in comparison to the stark 70% decrease in their Layer 2 (L2) asset holdings, signaling a significant pullback from these once-popular investments.
Eugene Cheung, VP and Head of Institution at Bybit, commented on the findings, noting, “Institutions have set their course for the coming months, and their strategies can be a beacon for smart traders, showing what may happen next. Such knowledge proves invaluable, especially for those new to crypto, illuminating the shifting tides of asset allocation..”
Bybit, established in 2018, continues to serve the crypto community, boasting over 20 million users worldwide. Known for its ultra-fast matching engine, round-the-clock customer service, and extensive multilingual community support, Bybit remains a key player in the crypto exchange arena. Additionally, its partnership with Formula One’s Oracle Red Bull Racing team underscores its commitment to excellence and innovation in the fast-paced world of cryptocurrency trading.
