Bybit: ETH surpasses BTC in terms of volume in institutional crypto portfolios

What’s new? Ethereum surpasses bitcoin in terms of volume in financial institutions’ portfolios, analysts at crypto exchange Bybit say in a new report. According to them, the altcoin’s popularity is due to an upcoming blockchain upgrade called Dencun, the success of which could lead to an increase in the asset’s value. ETH, which is trading at $3252 on Binance at the time of writing, has also outperformed bitcoin in terms of YTD growth (42,6% vs. 33,7%), driven by deflationary supply as a result of the transition to the Proof of Stake (PoS) consensus algorithm and the growing popularity of staking, Bybit writes.

Bybit’s report

What else is known? Based on client surveys, Bybit analysts write that institutional investors are rebalancing portfolios in favor of ETH, with bitcoin being the second largest currency. This is in stark contrast to the sentiment of retail traders, who are much more optimistic about the first cryptocurrency.

Bybit also noted that institutions have significantly reduced their positions in altcoins, especially in volatile categories such as meme coins, artificial intelligence, and BRC-20 tokens, despite their high returns in 2023. Institutionalists are now focusing on more stable assets such as tokens of layer 1 (L1) networks and decentralized financial protocols (DeFi).

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Overall market sentiment has changed since December last year: Bybit published a report stating that institutions were optimistic about bitcoin and mixed about Ethereum, and were shifting assets from altcoins to BTC in anticipation of approval of spot exchange-traded funds (ETFs) based on it in the United States.

Separately, Bybit also mentioned the native token of the Solana (SOL) blockchain. Thus, despite high returns in Q3 2023, neither institutions nor retail users are currently interested in holding the token, and as of January 31, SOL’s share of institutional crypto portfolios is less than 10%. Additionally, outflows from SOL-based derivatives totaled $3 million last week.

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Ethereum developers plan a Dencun hard fork on the mainnet on March 13. The upgrade will introduce a proto-danksharding feature that will reduce transaction fees on L2 networks by allocating storage space. Earlier, CoinShares said that Dencun could reduce the amount of ETH burned.