According to research from Bybit, institutional traders expressed significant bullish sentiment toward Bitcoin, mixed feelings toward Ether, and a general air of skepticism toward altcoins.
From December 2022 to September 2023, the study provides in-depth insight into trading behaviors and asset allocation amid significant market fluctuations.
Institutional traders favor BTC and move away from Alts
THE study reveals a significant shift in institutional traders’ approach to major cryptocurrencies. Bitcoin holdings among this group have seen a substantial increase, doubling over the first three quarters of 2023.
September marked a turning point, with half of institutional traders’ portfolios allocated to Bitcoin. This aligns with 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 declined after Shappella in April, with a decrease in holding percentage among most traders. However, a surprising increase in Ether holdings by institutional traders was seen in September, suggesting a more optimistic sentiment towards cryptocurrencies.
Stablecoins presented a different picture. Retail traders have always preferred them, especially in uncertain market conditions. On the other hand, institutional traders have demonstrated a strategic shift, reducing their stablecoin holdings during bear markets, which could indicate good market timing.
This contrast became more evident in September, as institutional traders significantly reduced their stablecoin holdings, coinciding with an increase in investments in Bitcoin and Ether.
Altcoins, however, have not found favor with institutional traders. Interest in these alternative tokens has historically been low, with a brief peak observed in May 2023. This trend indicates a clear preference by institutional traders for more established cryptocurrencies.
UTA’s role in improving market adaptability
Bybit’s research indicates that the United Trading Account (UTA) offers a solution for managing market volatility, allowing flexible adjustments to leverage based on market conditions.
The research highlights UTA’s effectiveness in managing asset allocation amid fluctuating markets, thereby avoiding unnecessary liquidations during periods of high volatility.
The Bybit study focused on active users, particularly those who made more than 20 monthly transactions. It analyzed the critical periods of bull markets (January, March, April and June 2023) and bear markets (December 2022, May and August 2023).
The research explored user trading behavior across different asset classes, meticulously examining institutional traders (INS), VIP traders with assets above $50,000, and retail traders.
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