Ethereum Still Leads in Holdings Despite Bitcoin’s Favorable Growth Outlook

In a recent investor sentiment survey, Bitcoin emerged as the cryptocurrency with the most compelling growth outlook, preferred by 43% of respondents, primarily at the expense of Ethereum.

Yet, despite this shift in sentiment, Ethereum continues to maintain its position as the largest holding in investors’ portfolios. Investors, it seems, are also increasingly venturing into alternative cryptocurrencies (altcoins), such as liquid staking derivatives and Layer 2 solutions, an area that saw an uptick from last month to 10%.

Despite its second-place sentiment, Ethereum’s stronghold in investment portfolios remains undisputed, with investors evidently reducing their stakes in both Ethereum and Bitcoin in favor of alternatives like Polkadot, Cardano and Ripple-affiliated XRP. Notwithstanding this shift, it is crucial to note that despite the increased optimism for these “other” altcoins, overall positioning has declined, which may be attributable to their relative price weakness.

Digital asset weighting in portfolios took a noticeable dip in the survey period, falling from 1.8% in April to 0.7% at the end of June.

However, a resurgence in investment has been observed in the past three weeks, with a notable inflow of over US$470 million, a strong recovery from the US$400 million outflow witnessed in the first half of 2023. This rapid change in sentiment is likely catalyzed by the recent BlackRock ETF filing.

The potential for growth in distributed ledger technology (DLT) is a key driving force behind the increased interest in digital assets, accounting for 37% of all reasons to add to a portfolio.

Investors are also diversifying into digital assets as a safe haven, a sentiment that first emerged during the recent U.S. banking crisis. Regardless, the prevailing risks for investors remain the threat of regulation and potential government bans, especially in light of recent saber-rattling from the U.S. SEC.