Institutional Investors Flee Bitcoin for Stablecoins Amid Compressed Basis Yields

A recent report from Glassnode highlights a significant trend in the crypto market: institutional investors pulling out of Bitcoin and Ethereum, while pouring into stablecoins.

According to the data, $9.6 billion has been withdrawn from Bitcoin, with an additional $3.2 billion leaving Ethereum through February and early March. In contrast, stablecoins have seen a substantial influx of $6.2 billion in net inflows.

The shift is largely due to compressed basis yields, which are compressing from their August 2025 peaks. This has made traditional market-neutral hedge fund strategies less attractive, pushing institutions towards dollar-denominated on-chain instruments rather than spot crypto exposure.

Despite the bearish trend, there are some signs of recovery. Bitcoin ETF and Digital Asset Trust flows have flipped positive after brutal February outflows, recovering to +28,000 BTC and +46,800 BTC respectively. However, Glassnode warns against reading too much into this bounce, stating that the recovery remains early-stage and uneven.

Ethereum's DeFi ecosystem has also taken a hit, with Total Value Locked recording peak monthly outflows of $23.7 billion in February. This decline stretches back to August 2025 and shows no signs of reversing, attributed to 'diminished conviction in DeFi risk-adjusted returns.'