According to research by Bybit, institutional traders have expressed a significant bullish sentiment towards Bitcoin, mixed sentiments regarding Ether, and a general air of skepticism towards altcoins.
From December 2022 to September 2023, the study provides an insightful look into trading behaviors and asset allocation amidst significant market fluctuations.
Institutional Traders Favor BTC, Moving Away from Alts
The study reveals a significant shift in the institutional traders’ approach to major cryptocurrencies. Bitcoin holdings among this group saw a substantial increase, doubling in the first three quarters of 2023.
September marked a turning point, with half of institutional traders’ portfolios allocated to Bitcoin. This aligns with the positive market sentiment towards the primary crypto, fueled by expectations of regulatory advancements and the potential approval of a Bitcoin ETF.
In contrast, Ether’s appeal has reduced post-Shapella in April, with a decreased holding percentage across most traders. However, a surprising surge in Ether holdings by institutional traders was noted in September, suggesting a broader upbeat sentiment towards cryptocurrencies.
Stablecoins presented a different picture. Retail traders consistently preferred them, particularly in uncertain market conditions. On the other hand, institutional traders displayed a strategic shift, reducing stablecoin holdings in bear markets, possibly indicating adept market timing.
This contrast became more apparent in September, as institutional traders significantly reduced their stablecoin holdings, coinciding with an increase in Bitcoin and Ether investments.
Altcoins, however, did not find favor with institutional traders. The interest in these alternative tokens has been consistently low, with a brief spike observed in May 2023. This trend indicates a clear preference among institutional traders for more established cryptocurrencies.
UTA’s Role in Enhancing Market Adaptability
Bybit’s research states that the United Trading Account (UTA) offers a solution for navigating market volatility, allowing flexible leverage adjustments according to market conditions.
The research highlights the effectiveness of UTA in managing asset allocation amidst fluctuating markets, potentially preventing unnecessary liquidations during high volatility periods.
The Bybit study focused on active users, specifically those who conducted more than 20 monthly trades. It analyzed critical periods in bullish (January, March, April, and June 2023) and bearish markets (December 2022, May, and August 2023).
The research explored the trading behavior of users across different asset classes, meticulously examining institutional traders (INS), VIP traders with assets exceeding $50K, and retail traders.
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