(Bloomberg) — For years, retail investors were crypto’s most reliable fuel — the dip-buyers, the memecoin speculators, the momentum traders that powered every rally. Now they’re moving on, stalling the demand engine that digital assets have depended on for a decade.
Speculative demand that once concentrated in crypto is being sucked into stocks, according to a new report from market-maker Wintermute that draws on JPMorgan Chase & Co. data. Since late 2024, retail has been steadily shifting toward equities, a trend that accelerated sharply after the October crypto crash, according to the report. It marks a break from the previous investing cycle when stocks and digital assets broadly moved in tandem as twin bets on risk appetite.
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The shift strikes at something fundamental about crypto’s market structure. Unlike equities, which are supported by corporate earnings, dividends, and institutionally mandated buying, crypto has long depended on retail’s animal spirits as the primary demand driver. If that demand is being dispersed across a growing menu of high-octane equity trades, it challenges the assumption that digital assets can sustain a recovery without a new catalyst to lure mom-and-pop investors back.
“In prior cycles, excess retail risk appetite tended to concentrate in crypto,” said Evgeny Gaevoy, chief executive officer of Wintermute. Crypto has now been reduced to “one of many risky-asset classes with similar volatility profile that retail can use to invest and speculate on,” he added.
The October crash was the accelerant. More than $19 billion in positions were wiped out — $7 billion of them in less than an hour — liquidating over 1.6 million traders, according to Coinglass data. Since then, there’s been “a near-complete pivot into equities that is still ongoing,” per Wintermute. Bitcoin has roughly halved — from around $126,000 — as equity indexes have powered ahead. Over the weekend, it’s traded around $66,000 amid news of US and Israeli strikes on Iran.
The crypto industry has been casting around for explanations — gold, prediction markets, memecoins burning out — for why retail vanished. The gravitational pull may extend beyond equities alone, said Cosmo Jiang, a portfolio manager at Pantera Capital.
“You can see this in monthly ETF data into some of the most recent hyped-up assets, including gold, silver, quantum and other thematic ETFs surging, while at the same time outflows have been seen in BTC and ETH,” he said. “I believe that speaks to a direct correlation there — that a meaningful amount of speculative retail attention and momentum rotated into those other thematic trades.”
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