According to Bybit’s Q2 Asset Allocation report, stablecoin holdings among institutional and retail investors decreased from 50.2% in December to 42.8% in May.
The report indicates a decline in the percentage of stablecoin holdings among all users over the past month.
Bitcoin remains the dominant asset, comprising 26% of total holdings as of May 2024.
Excluding stablecoins, Bitcoin and Ethereum collectively represent 61% of users’ cryptocurrency investments.
Retail Traders Show Preference for Bitcoin Over Ethereum
Despite the renewed optimism for ETH Spot ETFs, retail traders, much like institutions, continue to favor BTC over ETH.
However, institutional positions in BTC and ETH are more concentrated compared to those of retail traders, comprising 39.4% and 20.9% of their respective holdings as of May.
The report provides deeper insights into the investment behaviors across different user segments, highlighting the strong preference of institutional investors for Bitcoin.
Since the SEC’s approval of Bitcoin Spot ETFs in January 2024, institutional holdings in Bitcoin have steadily risen, while their Ether positions have unexpectedly declined.
This trend suggests that institutions perceive Bitcoin as the more attractive investment, possibly due to concerns surrounding Ether Spot ETFs not encompassing staking rewards.
In contrast, retail traders demonstrated their market-timing ability during the March-April 2024 correction period.
They reduced their Bitcoin holdings in March and gradually re-invested in April and May, indicating that some successfully navigated the downturn and capitalized on the subsequent market rebound.
The report also discussed the asset allocation strategies across different user segments.
Institutions maintain more focused positions in Bitcoin and Ether, with their concentration ratio increasing from 25.4% in December 2023 to 39.4% in May 2024.
On the other hand, retail traders have more diversified portfolios, though they have slightly increased their concentration due to a growing preference for new altcoins.
Altcoin Holdings See Fluctuations
The report also highlighted significant fluctuations in users’ holdings of altcoins.
Initially, altcoin holdings decreased from 25% in January 2024 to 20.9%, but then rebounded to 22.5% by May 2024.
These fluctuations were driven by emerging trading narratives, including Bitcoin Layer 2 projects and meme tokens, which have gained popularity among retail traders.
While institutions have increased their altcoin investments in Q2 2024, particularly in new tokens, retail traders have shown a stronger preference for altcoins, especially meme tokens and Bitcoin Layer 2 projects.
Advocates of stablecoins argue that their ability to facilitate near-instantaneous transactions at low costs makes them ideal for disrupting the payments sector.
In a move to leverage stablecoins, PayPal introduced its PYUSD stablecoin last year to enable instant and cost-effective transfers within its payment ecosystem.
Similarly, Stripe announced on April 25 that it would enable merchants on its platform to accept stablecoins for online transactions, starting with USDC stablecoins on the Solana, Ethereum, and Polygon blockchains.
