Study: Institutions More Bullish on Ethereum in H2 of 2023 — BTC and ETH Holdings Surge to 80%

Between July 2023 and January 2024, the concentration of bitcoin and ethereum in institutional digital asset portfolios increased from 50% to 80%, the latest Bybit user asset allocation report has shown. During this period, institutions appeared to be more bullish on ethereum than bitcoin, a sentiment that contrasted with that of retail investors.

Stablecoins and Altcoins Comprise One-Fifth of Institutional Digital Asset Portfolios

According to the digital asset exchange Bybit’s latest user asset allocation report, between July 2023 to Jan 2024, the share or concentration of bitcoin (BTC) and ether (ETH) in institutions’ digital asset portfolios grew from 50% to 80%. The data indicates that each of these cryptocurrencies accounts for half of this latest allocation figure, with stablecoins and altcoins making up the remaining 20%, at 15% and 5% respectively.

While the increased concentration of BTC and ETH in institutional portfolios could be interpreted as a bullish sentiment toward these leading crypto assets, the crypto exchange platform’s 2024 report suggests the pendulum is shifting from bitcoin to ether.

“Institutions are betting big on ether. The trend starts in September 2023 and accelerates in January 2024 to around 40%. Ether is the single largest holding by INS [institutions] as of 31 Jan 2024. The over-allocation to ether might have to do with institutions’ anticipation of the positive impact of the Dencun upgrade on Ethereum in the context of the relative underperformance of ether in 2023,” the report concluded.

Source: Bybit report.

The report also highlights the possible approval of spot ethereum exchange-traded funds (ETFs) as a contributing factor to institutions’ growing interest in the crypto asset. On the other hand, the reduction in bitcoin allocation by these institutions, which seemingly began in early December 2023, coupled with an increase in their ETH holdings, appears to back the report’s claims.

Source: Bybit report.

Institutions Nearly Exit All Positions in Meme and AI Tokens

In contrast to their institutional counterparts, retail investors’ concentration in BTC and ETH only averaged 35% as of Jan. 31, 2024. According to the report, such a concentration aligns with the “distinct investment style” of retail investors, which appears to prioritize altcoins and cash or stablecoins.

Despite their lower average BTC and ETH concentration, retail investors are nevertheless more bullish on bitcoin than ethereum, the report said.

Turning to institutions’ allocation of capital to meme tokens, artificial intelligence (AI) tokens, and BRC-20 tokens, data from the Bybit study indicates that institutions had “almost entirely exited positions in these highly volatile token categories.”

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