Bybit sees BTC, ETH ‘flight’ of institutional investors to stablecoins, but not for long

Bybit sees BTC, ETH ‘flight’ of institutional investors to stablecoins, but not for long

The cryptocurrency exchange Bybit released its fourth quarter report on Dec. 4, highlighting and comparing trends between its institutional and retail investors.

The report found that institutional traders had some 45% of their assets in stablecoins, with the remaining split 35% in Bitcoin (BTC), 15% in Ether (ETH) and only 5% in altcoins, which the exchange categorizes as anything other than the aforementioned digital assets.

The survey suggests that the “flight” to “safer assets,” like stablecoins, in a bear market “might explain this risk-averse asset allocation from traders.”

Nonetheless, institutional traders’ allocation of Bitcoin did spike in September, which differentiated itself from the holding patterns of other types of users.

Surge in institutional traders’ BTC holdings in September 2023. Source: Bybit

According to Bybit, the alignment of a surge in institutional BTC holdings with the prevailing positive market attitude toward Bitcoin can be correlated with “favorable lawsuit outcomes, fostering anticipation for the SEC’s potential approval of a spot BTC ETF.”

On Dec. 4, BTC surged above $41,000 for the first time in 19 months, and the overall market capitalization for the digital asset passed $800 billion, overtaking the real multinational holding company Berkshire Hathaway, and is now behind companies like Meta (formerly Facebook) and Nvidia.

Related: Coinbase warns customers about subpoena in apparent CFTC Bybit probe

Bybit also noted that its retail traders had the lowest holdings, percentage-wise, of Bitcoin compared to its other types of users. Comparatively, its retail traders held more stablecoins, and although stablecoins still made up a large portion of institutional portfolios, their holdings began to decline.

Earlier this year, the exchange said its user base hit 20 million, and last year, it was ranked among the top 10 cryptocurrency exchanges in the world by volume.

As BTC prices continue to climb, interest from major institutions seems to be on the rise. On Dec. 4, Brazil’s largest bank, Itaú Unibanco, reportedly launched a BTC trading service for its clients connected to its investment platform.

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