The crypto market is polarizing - institutional investors focus on BTC and ETH, while retail investors chase alts | CoinDesk JAPAN

• In the current cycle, while institutional investors are mainly investing in BTC and ETH, retail investors are expanding their investments in meme coins and altcoins, as noted by trading firm Wintermute in their mid-term report.
• OTC trading volume has surged, with trading volume from institutional investors in traditional finance increasing by 37% year-on-year.
• The report points out that as institutional investors increasingly treat cryptoassets as macro assets and the market becomes more specialized, this divergence is likely to continue.

The crypto market is becoming polarized.

According to the mid-term report of the crypto trading company Wintermute, there is a growing tendency for institutional investors and retail investors to take different paths, with institutional investors sticking to Bitcoin (BTC) and Ethereum (ETH), while retail investors are investing in altcoins and meme coins.

An analysis of over-the-counter (OTC) spot trading volume revealed that the trading volume of the two major tokens by institutional investors remained flat at 57%. This is thought to be due to inflows of funds into ETFs (exchange-traded funds) and structured accumulation methods. On the other hand, retail investors have reduced their exposure to Bitcoin and Ethereum from 46% to 37%, shifting funds toward newer and more speculative tokens.

"This divergence is not temporary. It is a sign that we are experiencing a more mature, refined, and professional crypto market," said Evgeny Gaevoy, CEO and founder of Wintermute.

"Investors are no longer chasing the same trends," he added. "While institutional investors treat cryptoassets as macro assets, retail investors continue to be attracted to innovation."

[Wintermute] Overall, traditional financial (TradFi) institutions have been the fastest-growing group in OTC trading volume, with a year-on-year increase of 32%. This growth is driven by regulatory advancements such as the U.S. GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins) Act and the introduction of MiCA (crypto market regulations) in the European Union, which are reported to have heightened the willingness of major companies to enter the market.

Retail brokers are also showing active movements, with trading volume in the first half of 2025 increasing by 21% compared to the same period last year. Meanwhile, cryptoasset native companies have reduced their trading volume, decreasing by 5%.

The report points out that the trading volume of OTC options surged by 412% compared to the first half of 2024, as institutional investors adopted derivative trading for hedging and yield generation. Meanwhile, the types of CFDs (Contract for Difference) have doubled, allowing for access to less liquid tokens in a more capital-efficient manner.

Wintermute stated that the spot trading volume at its OTC desk is increasing at a pace that exceeds that of centralized exchanges by more than twice, suggesting a shift towards more cautious and larger trades preferred by traditional financial institutions.

Decentralization of Meme Coin Trading

The company pointed out that trading activity in meme coins is becoming more decentralized. Although the trading volume of meme coins by retail investors has decreased, the number of tokens traded by individual users has doubled, indicating a growing demand for micro-cap assets in the market's long tail.

In this regard, the report pointed out that traditional tokens like Dogecoin (DOGE) and Shiba Inu Coin (SHIB) have begun to decline under the pressure of the rise of niche tokens such as Bonk (BONK), Dogewithhat (WIF), and Popcat (POPCAT).

Looking ahead to the second half of 2025, analysts at Wintermute have called attention to the status of the Dogecoin spot ETF application, with expectations that a final decision from regulators will be made by October.

The report states, "This result could have a significant impact on the retail investor market and could set a precedent for other alternative assets."

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