Institutional Investors Increase Meme Coin Investments

Institutional Investors Increase Meme Coin Investments

A report by cryptocurrency exchange Bybit reveals a significant surge in institutional investments in meme coins in 2023. This trend is evident in institutional investment figures, which climbed from $63 million at the year's start to approximately $300 million in April, marking a nearly 4.5x increase.

Popular Meme Coins for Investments

Dogecoin (DOGE) and Shiba Inu (SHIB) received the majority of institutional capital, primarily due to their high liquidity in the spot market. This liquidity enables large-scale buying and selling without significantly influencing market prices.

BONK Emerges as a Strong Contender

BONK emerged as a noteworthy altcoin in the meme coin market, attracting over $75 million in institutional investment and establishing itself as the most sought-after new meme coin this year. This highlights the growing diversification in meme coin investments.

May Reversal

However, this trend experienced a slight setback in May, with institutional holdings of meme coins nearly halving to $125 million, attributed to profit-taking by institutions.

Strategic Portfolio Readjustments

During this period, institutional orientations underwent a shift towards other cryptocurrencies. Stablecoin holdings declined, while investments in Bitcoin (BTC), Ethereum (ETH), and meme coins increased, indicating a strategic readjustment of crypto portfolios.

Dogecoin Dominance

As of May 1, Dogecoin held the largest share of meme coin holdings among both individual and institutional investors. While institutional investors allocated 36% to DOGE, individual investors allocated 24.5%. This preference is likely due to DOGE's higher liquidity and perceived stability within the sector.

Distribution Differences

Both groups also invested in Ethereum-based meme coins like PEPE and SHIB, although their distributions varied.