The Ethereum price surged to a 22-month high, propelled by a new Bybit Research report indicating a preference among institutional investors for the altcoin leader over Bitcoin (BTC).
With ETH climbing more than 6% in the past 24 hours to reach $3,262.08, the report highlights a significant shift in investor sentiment since December.
In January, institutional investors allocated 39.82% of their holdings to ETH, slightly surpassing the 39.49% allocated to Bitcoin. This minor difference signals a historical shift away from BTC, previously the favored choice, towards ETH, the second-largest crypto by market cap.
The impending Dencun upgrade, scheduled for launch in March 2024, is seen as a potential catalyst for this change, with its promise to reduce transaction costs on Layer 2s through “proto-dank sharding.”
The report attributes ETH’s outperformance against BTC, with a 33% rally year-to-date, to its deflationary supply, reduced supply on exchange platforms, and increased staking activity.
Despite the optimistic outlook for ETH, the rest of the altcoin market struggles to maintain investor interest. Bybit notes a decline in institutional exposure to smaller-cap altcoins, including meme coins, artificial intelligence, and BRC-20 tokens, despite their impressive returns in 2023.
Instead, investors are turning their focus to assets offering higher stability, such as layer-1 tokens and decentralized finance protocols.
Regarding Solana (SOL), both retail and institutional investors seem lukewarm, despite its recovery from losses during the previous bear cycle. Profit-taking has been observed since SOL reached $40, with its dominance in portfolios diminishing. By the end of January, SOL represented only a single-digit percentage of institutional portfolios, according to Bybit’s research.
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