Institutional traders have significantly increased their holdings of Bitcoin (BTC) during the first three quarters of 2023, nearly doubling their assets in the largest cryptocurrency. This substantial surge in Bitcoin holdings is attributed to positive market sentiment and heightened anticipation surrounding the approval of a spot BTC exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC).
In stark contrast, retail traders have maintained lower BTC holdings, possibly due to their engagement in higher leverage trading activities, according to research conducted by Bybit.
Institutional enthusiasm boosts Bitcoin’s dominance
By September 2023, institutional traders had allocated half of their assets to Bitcoin, signifying a remarkable shift in their portfolio composition. The bullish outlook for Bitcoin’s future, driven by the potential ETF approval and general optimism in the market, has motivated institutional players to significantly increase their exposure to the cryptocurrency.
The current market dynamics reflect a stark contrast between institutional and retail traders regarding their BTC holdings.
The Bybit research report also highlights institutional skepticism towards altcoins, which are cryptocurrencies other than Bitcoin. Data analysis reveals a consistent decline in altcoin holdings among traders, with a brief resurgence in May followed by a notable decrease starting in August, particularly among institutional investors.
This decline is indicative of a cautious approach adopted by institutions when dealing with more volatile assets in the crypto space.
Ether (ETH) holds steady amidst Shapella upgrade
The research data further reveals that Ether (ETH) holdings have generally declined since the Ethereum blockchain’s Shapella upgrade. However, there was a surge in Ether holdings among institutional traders in September. This surge coincided with a positive overall sentiment in the crypto market, driven by excitement surrounding the news of potential ETFs.
In terms of market performance, Bitcoin has demonstrated exceptional strength in 2023. The price of Bitcoin has surged by approximately 140% year-to-date, underlining its status as a dominant force in the cryptocurrency market. In contrast, Ether has experienced an 87% increase in its price during the same period. This divergence in performance has caught the attention of market analysts and investors alike.
A report from K33 Research in October 2023 indicated a shift in asset allocation recommendations, advising a pivot back to Bitcoin. The primary reason cited for this shift is Ether’s prolonged underperformance against Bitcoin, a trend that has been observed since July 2022. Additionally, the muted response to the newly launched futures-based ETH ETFs has raised concerns about Ether’s ability to maintain its position relative to Bitcoin.
