Institutions Bet Big as Stablecoins Fade—Altcoins Capture $1.72 Billion in Q3

Investors significantly reduced their stablecoin holdings in Q3 2025, according to the latest asset allocation report from Bybit, the world's second-largest cryptocurrency exchange by trading volume. The shift saw investors reallocating funds toward altcoins, with Solana (SOL), XRP, and decentralized exchange (DEX) tokens emerging as the most prominent beneficiaries. This trend underscores a broader diversification strategy within the digital asset market, with stablecoin reserves being redirected to higher-growth and higher-yield assets.

According to the report, stablecoin holdings fell from 35.42% in June to just 25% in August 2025, marking a 20% decline. This decline was primarily driven by institutional investors, who cut their stablecoin holdings to 17.2%, compared to 55.7% among retail traders. Institutions, with their focus on return-sensitive strategies, were more aggressive in reallocating capital to altcoins, highlighting their growing appetite for assets with higher growth potential.

Bitcoin and Ethereum remain dominant in investor portfolios. Bitcoin accounted for 31.7% of investors’ total assets in August 2025, up from 28.4% in January. However, its allocation has remained relatively stable since May. Meanwhile, Ethereum experienced a 20% increase in its holding percentage, rising from 8.4% in May to 10.1% in August. This growth was attributed to investors utilizing stablecoin reserves in their wallets for Ethereum rather than reallocating from other major tokens.

Solana’s performance stood out in the quarter, with its holdings reaching the highest levels of the year. The surge was attributed to expectations that treasury strategies applied to Bitcoin and Ethereum would also extend to Solana. The rise of the REX-Osprey SSK ETF and the anticipated SEC approval of a Solana spot ETF were key factors driving institutional interest in the asset. Additionally, Solana’s technological upgrades, such as the Alpenglow and Firedancer enhancements, improved its scalability and cost-effectiveness, further solidifying its appeal.

DEX tokens were the largest beneficiaries of the decline in stablecoin holdings, with their allocation increasing fourfold from 0.4% in June to 1.8% in August. This surge was largely driven by institutional investment, with their holding percentage increasing sevenfold in the same period. Layer 2 assets also saw significant growth, rising from 0.8% in June to 2.1% in August, while real-world asset (RWA) tokens experienced notable gains. In contrast, meme coins and gold tokens remained relatively stagnant, indicating a preference for more established and scalable asset classes.

The broader market dynamics reflect a shift away from traditional stablecoin holdings toward a more diversified portfolio of altcoins and digital assets. This trend is particularly pronounced among institutional investors, who are leveraging Solana’s infrastructure and staking yields to generate passive income. Solana’s institutional adoption surged during Q3 2025, with $1.72 billion flowing into its treasuries and 13 publicly traded firms acquiring 1.44% of its total supply. These inflows were driven by the approval of the REX-Osprey Solana Staking ETF and the anticipated SEC approval of a Solana spot ETF, which could unlock $3.8–$7.2 billion in institutional capital.

The regulatory landscape also played a significant role in shaping investor behavior. The passage of the GENIUS Act in the United States and the implementation of the Hong Kong Stablecoin Ordinance provided a clearer legal framework for stablecoin issuance and usage. These developments were instrumental in attracting institutional capital and enhancing market confidence in the digital asset ecosystem. In Asia, regulatory adaptability, particularly in Japan and South Korea, further accelerated the adoption of digital assets, with tax cuts and investment guidelines encouraging institutional participation.

In summary, Q3 2025 marked a pivotal shift in investor preferences, with stablecoin holdings declining in favor of altcoins and higher-yield assets. Solana, XRP, and DEX tokens emerged as the primary beneficiaries, driven by technological advancements, regulatory clarity, and institutional demand. The broader market dynamics reflect a growing appetite for diversified and innovative investment opportunities within the digital asset space, signaling a new era of growth and transformation for the crypto market.