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Institutions Favor Ethereum (ETH): ByBit Report

Divergent investment strategies: Institutions favour Ethereum (ETH) and Bitcoin (BTC) with an 80% portfolio concentration, while retail users lean towards altcoins, reveals Bybit research.

Claudia Fischer

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Institutions Favor Ethereum: ByBit Report

Institutional investors are shifting towards Ether over Bitcoin (BTC), anticipating its upgrade, while retail investors stick with Bitcoin and altcoins, according to a report by ByBit.

The latest report on institutional investors’ allocations to Ether by the crypto derivatives exchange ByBit reveals that professional investors are moving away from Bitcoin toward Ethereum more than retail investors.

Greater Confidence in Ethereum Upgrade Potential

Institutions have doubled their holdings in Bitcoin and Ether by 80%. They are particularly confident in Ether due to its upcoming Docking upgrade on the Ethereum blockchain network. The upgrade is given credit for the probability of enhancing Ethereum’s scalability, security, and sustainability.

Also Read: Bybit Introduces TradeGPT for Crypto Trading

Institutions prefer Ether over Bitcoin because Ether’s staking model creates scarcity, boosting its value. Also, developments like DeFi apps and layer 2 solutions on Ethereum increase confidence in its future.

This contrasts with sentiment in December, when Bybit’s prior report showed institutions were more favorable toward Bitcoin, coinciding with anticipation of a Bitcoin exchange-traded fund being approved.

Retail Remains Drawn to Bitcoin and Altcoins

Meanwhile, retail crypto investors have lower exposure to Bitcoin and Ether and higher holdings in alternative cryptocurrencies (altcoins), especially more volatile assets like meme coins and smaller market cap tokens.

Retail traders have not matched the same shift in preference from Bitcoin toward Ether. This suggests Bitcoin remains the crypto asset of choice for more mainstream individual investors while institutional capital is flowing into Ether’s more complex ecosystem and the promise of its still forthcoming upgrade.

Decreased Interest in AI, DeFi-Focused Altcoins

The latest Bybit report also indicated institutions have cut their altcoin positions substantially, despite high returns, zeroing in on more stable layer-1 and decentralized finance protocol tokens. There was particular disinterest in artificial intelligence-focused tokens, which had previously rallied alongside AI leader Nvidia‘s stock price gains.

However, Decentralized projects like Solana fell out of favour with both institutional and retail investors. As the Docking upgrade nears, attention may shift to Ether. While Bitcoin and Ether currently dominate, altcoins remain popular in retail portfolios.

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