Crypto: Memecoins are exploding in institutional investors' portfolios

The meteoric rise of memecoins, these atypical cryptocurrencies marked by high volatility, attracts not only retail investors but also institutions. The allure of memecoins like Dogecoin and Shiba Inu seems irresistible, despite the rollercoasters of their value. Fueled by social media and community buzz, these cryptos are attracting new investors. A report from Bybit confirms this trend, highlighting a dramatic increase in memecoin holdings.

Institutions Embrace Meme Cryptos

Memecoins continue to invade the crypto market, it seems. A new report from cryptocurrency exchange Bybit, entitled “Beyond the Hype: The Realities of Institutional Memecoin Investments“, reveals unprecedented enthusiasm by institutions for memecoins.

Between February and March, institutional holdings in memecoins surged by 226%, reaching $204 million. In April, this figure climbed to $293.7 million, before dropping to $139 million at the end of the studied period, indicating an aggressive selling strategy in response to market volatility.

“Institutional investors were ready to jump on the memecoin bandwagon as the trend peaked at the end of March“, emphasizes the report.

This opportunistic strategy reflects a calculated risk-taking, aiming to capitalize on the peaks of popularity of these atypical cryptos. Even after reducing their positions, institutions maintain a significant allocation of memecoins, showcasing their expectation of a return to favorable market conditions.

The appeal of meme cryptos for institutions lies not only in their potential for high returns but also in their ability to diversify portfolios beyond traditional assets and even conventional cryptocurrencies.

Dogecoin (DOGE) remains the darling of institutions, representing 36.17% of their memecoin holdings, followed by PEPE and SHIB, which continue to attract attention despite their speculative nature.

Retail Investors Are Not Left Behind

On the retail investor side, the appetite for meme cryptos is no less impressive. According to Bybit, retail holdings in meme coins exploded by 478% between February and April.

However, like their institutional counterparts, they also engaged in massive sales when the market began to deteriorate, dropping from $567 million to $371 million.

Retail investors show a notable preference for Ethereum-based memecoins, with 20.95% of their holdings in PEPE and 14.61% in SHIB. These altcoins, often mocked for their lack of solid fundamentals, benefit from massive online community support, fueling spectacular price increases.

However, retail strategies seem more diversified than those of institutions, with an average allocation of 4% of their portfolios to memecoins, compared to 2.5% for institutions.

“DOGE has certainly found its place in the long-term HODL stacks of both cohorts, reflecting its iconic status and strong performance over time“, observes the report.

Moreover, BONK, another lesser-known memecoin, has captured the attention of investors, particularly institutions which allocate a notable 10% of their memecoin holdings to it.

The rise of meme cryptos perfectly illustrates the unpredictable and fascinating nature of the cryptocurrency market. Whether retail or institutional, investors seem ready to bet on these colorful altcoins, hoping to ride the wave of popular trends to achieve significant gains.