Bitcoin and Ether Dominate Institutional Portfolios: Bybit Report

The crypto market’s rally clearly indicates that institutions have shown a stronger preference for Bitcoin and Ether, allocating approximately 40% each to these top assets. As of January 31st, 2024, these entities have dedicated 15% to stablecoins and only 5% to alternative coins.

A new report by Bybit suggests that institutional portfolios have become significantly more focused, increasing from 50% to 80% over the past few months.

In contrast, retail investors display a lower concentration in Bitcoin and Ether, comprising around 35% of their total portfolio by January 31, 2024. Retail investors have been found to exhibit a distinct investment approach compared to institutions and are more inclined toward altcoins and holding more cash, as indicated by a larger stablecoin allocation.

Altcoin Portfolios Reflect Institutional Skepticism Towards Layer 2

Despite the rising prominence of Layer 2s, institutions are showing optimism towards Layer 1s. Through their altcoin portfolio allocations, such investors have signaled their negative outlook on L2, particularly in anticipation of the highly awaited Dencun upgrade.

It is commonly believed that the fee reduction on L2 could initially lower revenue for such chains, but in the long run, it could provide a competitive advantage for them by increasing margins, Bybit explaine, have attained Type 1 status.

While institutional sentiment towards L1 appears strongly bullish based on the chart, there has been a decrease in the average dollar value of L1 assets held. However, this decline is significantly less pronounced compared to the drop observed in L2 assets.

Despite witnessing remarkable returns in 2023, institutions have steered clear of these high-risk, high-return investments during that period. These high-profile entities have largely divested from highly volatile token categories, such as meme, AI, and BRC-20 tokens, with the exception of L1#TrendingTopic #BTC #BTC ‬ #Bitcoin‬

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