Bitwise: TradFi advisers prefer stablecoins over Bitcoin

Traditional finance advisers are increasingly favoring stablecoins and tokenization over Bitcoin, according to a new report from Bitwise, signaling a structural shift in how institutional capital views digital assets. The survey reveals that registered investment advisers now prioritize yield-bearing stablecoins and real-world asset tokenization as the primary crypto allocation strategy, relegating Bitcoin to a secondary position in portfolio construction. This preference comes as Mastercard expands its stablecoin settlement capabilities, integrating both Ripple's RLUSD and Circle's USDC into its payment infrastructure, while Ethena Labs launches suiUSDe on the Sui blockchain with a $10 million yield vault and Terminal Finance hits $280 million in pre-launch deposits. The convergence of TradFi adviser demand, payment rail integration, and new stablecoin issuance creates a powerful flywheel: stablecoins are no longer just a trading tool but are becoming the core on-ramp for institutional participation in digital assets. Meanwhile, Bitcoin miner margins have dropped to record lows as capital that once flowed into BTC mining economics redirects toward stablecoin yield products. This matters now because it redefines the competitive landscape. Bitcoin's dominance as the gateway asset for institutions is cracking, and the stablecoin ecosystem is capturing the capital flows that once went directly into BTC.

How TradFi Adviser Preferences Are Reshaping Portfolio Allocations

Bitwise's survey of traditional finance advisers marks a turning point in institutional crypto adoption. The data shows that advisers now view stablecoins and tokenized assets as more strategically important than Bitcoin for client portfolios, a reversal from previous years when Bitcoin was the default entry point. This preference is driven by the ability to generate yield through stablecoin lending, staking, and tokenized treasury products. Bitcoin, as a non-yielding asset, cannot provide these functions. The shift is particularly pronounced among registered investment advisers managing high-net-worth clients, who require predictable income streams and regulatory clarity. Stablecoins like USDC and RLUSD offer a familiar dollar-denominated experience while delivering yields through protocols like Ethena's USDe, which currently backs the new suiUSDe on Sui. Tokenization of real-world assets (BlackRock's BUIDL fund being the prime example) further amplifies this trend by bringing traditional fixed-income instruments onto blockchain rails. The practical effect is that advisers are reallocating portions of their "crypto bucket" from spot Bitcoin holdings into stablecoin yield strategies and tokenized securities, compressing Bitcoin's share of institutional crypto AUM. This structural shift has direct implications for Bitcoin's price support, as the marginal buyer pool shifts from BTC-focused allocators to stablecoin-first portfolios.

Where the $10 Million Yield Vault and $280 Million in Deposits Flow

The financial mechanics of the stablecoin expansion are visible in Ethena Labs' latest deployment on Sui. The suiUSDe stablecoin launched with a $10 million yield vault, designed to attract capital by offering attractive returns through delta-neutral strategies that generate yield from funding rates and staking rewards. This vault structure mirrors Ethena's existing USDe product, which has accumulated significant liquidity across Ethereum and Solana. The scale of demand is underscored by Terminal Finance, an Ethena-backed decentralized exchange, which reached $280 million in pre-launch deposits. This is a clear signal that yield-seeking capital is flowing aggressively into stablecoin-based products. For Ethena Labs, the revenue model is straightforward: it earns fees on minting and redemption, plus a portion of the yield generated by the underlying collateral. The expansion to Sui opens a new revenue stream, as the Sui Foundation actively courts stablecoin issuers to deepen liquidity on its network. Anchorage Digital, the institutional custodian, is positioning to pay "rewards" on Ethena's tokens under the GENIUS Act framework, creating an additional distribution channel for yield to regulated entities. The P&L impact for Ethena is material: each new blockchain integration and vault launch expands its fee-generating asset base, while the $280 million in Terminal Finance deposits demonstrates that pre-launch capital commitments are already converting into live TVL. This capital flow directly competes with Bitcoin allocations, as yield-seeking institutions choose stablecoin vaults over passive BTC exposure.

Competitive Reshuffle: Mastercard, Ripple, Circle, and the Stablecoin Stack

Mastercard's integration of RLUSD and USDC for settlement reshapes the competitive dynamics of the stablecoin market. By embedding both Ripple's and Circle's stablecoins into its payment rails, Mastercard effectively endorses a multi-stablecoin future, undermining any single issuer's attempt to dominate settlement. For Ripple, the RLUSD integration is a critical validation, as it provides a real-world use case beyond XRP's struggling network. XRP transaction demand has fallen 91.5%, and the token trades at $1.11 with traders focused on $0.65 support. RLUSD gives Ripple a new revenue stream through settlement fees and cross-border payment volumes, diversifying away from its beleaguered native token. Circle's USDC, already the dominant regulated stablecoin, gains incremental distribution through Mastercard's merchant network, reinforcing its position as the default dollar-backed stablecoin for enterprise use. Meanwhile, Solana's Jupiter is developing JupUSD with backing from Ethena Labs, creating a decentralized alternative that competes directly with USDC and RLUSD on Solana's high-throughput network. The competitive landscape is fragmenting: Tether remains the largest by market cap but faces regulatory headwinds, while the Mastercard integration favors regulated issuers like Circle and Ripple. For Bitcoin, this fragmentation is a net negative. As stablecoins proliferate across payment rails and DeFi protocols, the transactional utility that Bitcoin once promised is being captured by stablecoins, reducing the narrative for BTC as a payments asset.

Downstream Effects on Hyperscalers, DeFi Protocols, and Enterprise Buyers

The stablecoin expansion creates second-order effects across the crypto infrastructure stack. On Sui, the launch of suiUSDe and the $10 million yield vault drives transaction volume and total value locked, directly benefiting validators and the Sui Foundation's ecosystem development budget. Sui's blockchain now hosts native stablecoins backed by Ethena and BlackRock's tokenized fund, making it a credible competitor to Ethereum and Solana for institutional DeFi. For Solana, Jupiter's JupUSD development with Ethena Labs deepens the network's stablecoin liquidity, which is essential for attracting enterprise buyers who require deep on-chain dollar pools. The Raydium exploit (a $1.34 million loss) highlights the security risks that accompany this rapid DeFi expansion, but the market's response has been muted, suggesting that yield opportunities outweigh security concerns for institutional capital. On the enterprise side, Strategy (formerly MicroStrategy) holds $56 billion in Bitcoin but recently sold BTC, causing its shares to fall. This sale, combined with Bitwise's adviser survey, signals that even the most committed Bitcoin bulls are facing pressure to diversify into yield-generating stablecoin products. Bitcoin miner margins are at record lows, testing BTC's $60,000 support level. This is a direct consequence of capital flowing into stablecoin yield rather than mining economics. The downstream effect is clear: stablecoins are absorbing the capital that previously supported Bitcoin's price floor, creating a self-reinforcing cycle where institutional demand for yield starves Bitcoin of its marginal buyer.

Policy Signal: What the GENIUS Act and ATM Bans Mean for Stablecoin Dominance

The regulatory landscape is accelerating the shift toward stablecoins. Delaware and New Jersey are advancing bills that would ban crypto ATMs, a move that targets retail Bitcoin access while leaving institutional stablecoin channels untouched. This asymmetric regulation favors the TradFi adviser channel that Bitwise's survey highlights. Stablecoins, issued by regulated entities like Circle and Ripple, operate within existing financial frameworks, while Bitcoin's peer-to-peer ethos faces increasing friction. The GENIUS Act, which provides a regulatory framework for stablecoins, is the key policy signal. Anchorage Digital's plan to pay "rewards" on Ethena's tokens under this act demonstrates how stablecoins are being integrated into the regulated custody and banking system, a path that Bitcoin's self-custody model cannot easily replicate. The CFTC's proposed framework favoring sports event contracts over gambling further illustrates the regulatory preference for structured, compliant products. Stablecoins fit this mold perfectly, while Bitcoin's volatility and lack of yield make it less attractive to regulators seeking to protect retail investors. The policy signal is unambiguous: regulators are building a moat around stablecoins, granting them access to payment rails, custody frameworks, and institutional distribution, while Bitcoin faces incremental restrictions. State-level bans on crypto ATMs in Delaware and New Jersey further constrain retail Bitcoin access, narrowing its distribution channel while stablecoin-friendly rails expand. This regulatory asymmetry will compound over time, as TradFi advisers allocate more capital to compliant stablecoin products, further entrenching stablecoins as the primary institutional crypto asset class.

The trajectory is clear: stablecoins are becoming the operating system for institutional crypto, while Bitcoin is being repositioned as a niche store of value within a diversified portfolio. Over the next 12 months, expect to see major asset managers launch tokenized money market funds that compete directly with Bitcoin ETPs for adviser allocations, and for stablecoin total market cap to surpass $300 billion as TradFi capital floods in. The winners will be infrastructure providers like Ethena Labs, which capture yield spreads across multiple blockchains, and payment networks like Mastercard that embed stablecoins into existing commerce rails. Bitcoin's $60,000 support level will face repeated tests as miner selling pressure combines with reduced institutional demand, and the token's path to recovery will depend on a new narrative (perhaps as a reserve asset for stablecoin collateral) rather than its historical role as the gateway to crypto.

The stablecoin wave is also reshaping competition between Layer 1 networks. Sui's decision to host suiUSDe alongside BlackRock's tokenized money market fund as native stablecoins positions it as a credible challenger for institutional DeFi liquidity against Ethereum's established stablecoin moat. Meanwhile, Solana's Jupiter developing JupUSD with Ethena Labs introduces a decentralized alternative on one of crypto's highest-throughput networks, creating a multi-chain race for stablecoin market share that will intensify across 2026. The network that accumulates the deepest stablecoin liquidity pool will become the default settlement layer for institutional digital-asset flows, a prize worth substantially more than any single token price appreciation. For investors, the message from Bitwise's survey is unambiguous: the institutional crypto portfolio of 2027 will be built on stablecoins, not Bitcoin.