Stablecoin Holdings Drop from 50% to Around 43% Among Investors: Bybit Report

Stablecoin holdings among institutional and retail investors decreased from 50.2% in December to 42.8% in May.

According to Bybit’s Q2 Asset Allocation report, the percentage of stablecoin holdings among all users has declined over the past month.

On the other hand, Bitcoin continues to be the largest single asset held, accounting for 26% of their total assets in the leading cryptocurrency as of May 2024.

When excluding stablecoins, Bitcoin and Ethereum make up 61% of users’ crypto investments.

Retail Traders Show Preference for Bitcoin Over Ethereum

Retail traders, similar to institutions, continue to show a preference for BTC over ETH, despite the renewed optimism for ETH Spot ETFs.

However, institutional positions in BTC and ETH are more concentrated compared to those of retail traders, with holdings of 39.4% and 20.9% respectively as of May.

The report delves further into the investment patterns of different user segments, emphasizing the clear preference of institutional investors for Bitcoin.

Following the SEC’s approval of Bitcoin Spot ETFs in January 2024, institutional Bitcoin holdings have consistently increased, while their Ether positions have seen a surprising decrease.

This suggests that institutions view Bitcoin as the more attractive option, potentially due to concerns about Ether Spot ETFs not including staking rewards.

In contrast, retail traders demonstrated their ability to time the market during the March-April 2024 correction.

They reduced their Bitcoin positions in March and gradually added them back in April and May, indicating that some were able to avoid the pullback and capitalize on the market’s rebound.

The report also touched on the asset allocation strategies of different user segments.

Institutions hold more concentrated positions in Bitcoin and Ether, with the concentration ratio increasing from 25.4% in December 2023 to 39.4% in May 2024.

Retail traders, on the other hand, have more diversified portfolios but have shown a slight increase in concentration due to their preference for new altcoins.

Altcoin Holdings See Fluctuations

The report also revealed notable fluctuations in users’ altcoin holdings.

Altcoin holdings initially dropped from 25% in January 2024 to 20.9%, before rebounding to 22.5% in May 2024.

These fluctuations were driven by new trading narratives, such as Bitcoin Layer 2 projects and meme tokens, which have become popular among retail traders.

While institutions have increased their altcoin positions in Q2 2024, primarily through investments in new tokens, retail traders have displayed a stronger preference for altcoins, particularly meme tokens and Bitcoin Layer 2 projects.

Advocates of stablecoins argue that their near-instantaneous transactions and low costs make them ideal for disrupting the payments sector.

In an effort to leverage stablecoins, PayPal introduced its PYUSD stablecoin last year to facilitate instant and lower-cost transfers within its payment infrastructure.

Similarly, Stripe announced on April 25 that it would allow merchants using its platform to accept stablecoins for online transactions.

The company is starting with USDC stablecoins on the Solana, Ethereum, and Polygon blockchains.