DUBAI, UAE – Institutional traders (INS) in the crypto markets maintain a conservative approach, with 50 percent of their portfolio in stablecoins and another 50 percent strategically invested in Bitcoin and Ether, according to a recent study conducted by Bybit Blog.
“This risk-averse strategy is particularly notable in bear markets, where a flight to ‘safer’ assets such as Bitcoin and Ether is evident,” said the research, focusing on the period from December 2022 to September 2023.
The study — which analyzed the behavior of active users on Bybit, a leading cryptocurrency exchange — was aimed at understanding the ever-evolving landscape of cryptocurrency asset allocation amid market volatility.
In September 2023, institutional traders allocated half of their portfolios to Bitcoin, influenced by positive market sentiment and anticipation of regulatory developments in the cryptocurrency space, the report said.
Retail traders, in contrast, showed a lower percentage of Bitcoin holdings, which could be linked to their comparatively higher leverage levels.
The report also noted a significant interest in Ether among institutional traders starting in September 2023, possibly due to a general upbeat sentiment toward the broader crypto market.
Another interesting trend observed was in the stablecoin holdings.
Retail traders consistently held a higher percentage of stablecoins, influenced by their leverage practices.
During bull markets, they tended to decrease their stablecoin holdings, whereas in bear or directionless markets, an increase was noted.
Institutional traders, on the other hand, showed a pattern of decreasing stablecoin holdings in bearish markets and increasing them during bullish periods, suggesting successful market timing.
The research also highlighted a general decline in the holding percentage of altcoins among all user groups, with a brief uptick in May that was short-lived.
This trend indicates a downbeat sentiment towards altcoins across the board.
Bybit’s research emphasized the importance of adaptive strategies in asset allocation, especially in the volatile cryptocurrency market.