Crypto: Memecoins are exploding in institutional investors’ portfolios

The Meteoric Ascent of Memecoins

The exuberant surge of memecoins, unique cryptocurrencies featuring high volatility, has captivated not only retail traders but also institutional investors. The allure of memecoins like Dogecoin and Shiba Inu appears irresistible, transcending their dramatic price fluctuations. Fueled by social media fervor and community enthusiasm, these cryptocurrencies are attracting an influx of investors. A report by Bybit corroborates this trend, highlighting a substantial increase in memecoin holdings.

Institutions Embracing Meme Cryptos

Memecoins continue to permeate the crypto market. A groundbreaking report from cryptocurrency exchange Bybit, titled "Beyond the Hype: The Realities of Institutional Memecoin Investments," unveils unprecedented enthusiasm for memecoins among institutional investors.

Between February and March, institutional holdings in memecoins skyrocketed by 226%, reaching $204 million. This figure ascended to $293.7 million in April before declining to $139 million by the end of the study period, indicating an active selling strategy in response to market volatility.

"Institutional investors were poised to capitalize on the memecoin frenzy as the trend peaked in late March," the report underscores.

This opportunistic approach demonstrates a calculated risk-taking strategy, aiming to leverage the popularity surges of these non-traditional cryptos. Despite reducing their positions, institutions retain a significant allocation to memecoins, signaling their anticipation of favorable market conditions returning.

The appeal of meme cryptos for institutions extends beyond their potential for high returns. They also offer diversification benefits, complementing traditional assets and even established cryptocurrencies.

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

Retail Investors Not Falling Behind

Retail investors have demonstrated equal enthusiasm for meme cryptos. Bybit's report indicates that retail holdings in meme coins surged by 478% between February and April.

Similar to their institutional counterparts, retail investors engaged in significant selling when market conditions deteriorated, resulting in a decline from $567 million to $371 million.

Retail investors favor Ethereum-based memecoins, dedicating 20.95% of their holdings to PEPE and 14.61% to SHIB. These altcoins, often dismissed for their perceived lack of fundamentals, benefit from fervent online community support, driving impressive price gains.

Retail strategies exhibit more diversification than institutional ones, with an average allocation of 4% of their portfolios to memecoins, compared to 2.5% for institutions.

"DOGE has secured a place in the long-term HODL collections of both groups, reflecting its iconic status and consistent performance over time," the report observes.

Furthermore, BONK, a lesser-known memecoin, has garnered attention from investors, particularly institutions, which allocate a notable 10% of their memecoin holdings to it.

The rise of meme cryptos underscores the unpredictable and captivating nature of the cryptocurrency market. From retail to institutional investors, participants are embracing these unconventional altcoins, eager to ride the waves of popular trends and potentially reap substantial rewards.