Institutional Investors Flee Risk Assets Amid Compressed Basis Yields

A recent report from Glassnode reveals a significant shift in institutional investor behavior, with a $9.6 billion outflow from Bitcoin and $3.2 billion from Ethereum in February and early March. This trend is largely attributed to compressed basis yields, which have made cash-and-carry trades less attractive.

As a result, institutional investors are rotating heavily into stablecoins, which absorbed $6.2 billion in net inflows. This rotation indicates dry powder accumulating on the sidelines, waiting for more compelling returns or a recovery in basis yields.

The decline in DeFi liquidity is also notable, with Total Value Locked recording peak monthly outflows of $23.7 billion in February. This trend stretches back to August 2025 and shows no signs of reversing.