The third quarter of 2025 brought a significant shift in the crypto market. Data from Bybit indicates that investors, seeking higher returns, drastically reduced their holdings in stablecoins and increased positions in altcoins, particularly Solana (COIN:SOLUSD), Ripple (COIN:XRPUSD), and tokens from decentralized exchanges (DEX).
Stablecoin allocations fell from 42.7% in April to just 25% in August, a drop of more than 20% in four months. Of the reallocated capital, only 4% went to Bitcoin (COIN:BTCUSD) and Ethereum (COIN:ETHUSD), while the majority flowed into altcoins, with SOL, XRP, and DEX tokens leading the way.
Institutions drove the rotation, reducing their stablecoin exposure to just 17.2%, compared with 55.7% held by retail investors. This gap suggests greater institutional conviction in higher-risk, higher-yield assets, with more active reallocation dynamics.
Bitcoin remains the dominant individual asset, representing 31.7% of portfolios in August, slightly above 28.4% in January. However, its share has remained stable since May, signaling a growing preference for positions in other cryptocurrencies.
Ethereum showed a strong recovery. Its allocation grew 20% during the quarter, rising from 8.4% in May to 10.1% in August, suggesting that investors used stablecoin reserves to increase ETH positions, particularly given expectations for staking yields and DeFi ecosystem growth.
Solana reached its highest allocation level in 2025, boosted by institutional interest and the potential approval of ETFs. XRP was the third-largest non-stablecoin asset, with allocations growing 30% between May and August amid anticipation of an ETF approval in the U.S.
DEX tokens had the largest proportional increase, quadrupling their share from 0.4% in June to 1.8% in August, driven by strong institutional inflows. Layer 2 tokens also gained ground, nearly tripling their share in the same period, while assets backed by real-world assets (RWA) showed moderate growth.
Bybit’s report indicates that while Bitcoin and Ethereum continue to anchor portfolios, risk appetite is shaping altcoin allocations. If the trend of declining stablecoin reserves continues, the fourth quarter could see an even more pronounced rotation of capital toward alternative assets.
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