A recent analysis from the Finestel platform reveals how investors respond to market changes, showing Bitcoin and Ethereum's stability alongside a surge in stablecoin allocations during sell-offs.
Asset Allocation in Bullish and Bearish Trends
The analysis indicates that during bullish market conditions, asset managers focus on cryptocurrencies like Bitcoin and Ethereum. In January, as Bitcoin approached $73,000, these two cryptocurrencies made up 57% of portfolio holdings. Meanwhile, stablecoins fell to 14%, suggesting a risk-on stance among investors.
Trends in Stablecoin Investments
In March and April, as markets exhibited volatility, there was a shift in asset allocation. By February, Bitcoin and Ethereum's share dropped to 47%, while stablecoins almost doubled to near 30%. This indicates that asset managers started utilizing Tether and USD Coin for liquidity and downside protection.
Key Findings of the Research
The financial report emphasizes three key themes: Firstly, Bitcoin and Ethereum serve as a 'risk-managed baseline' in portfolios. Secondly, stablecoins provide tactical liquidity, fluctuating between 14% and 30% based on market conditions. Lastly, allocations to DeFi and layer-1 tokens expand in bullish or stable phases but are trimmed during risk-off conditions.
The insights from this research highlight the importance of flexible investment strategies in cryptocurrency, emphasizing the growing role of stablecoins in asset management amidst market uncertainties.
