TLDR
- Retail traders moved from altcoins back to Bitcoin and Ether after the October 2024 crypto market crash and liquidation event
- Average altcoin rallies dropped from 60 days in 2024 to just 19-20 days in 2025, showing reduced conviction from investors
- The traditional four-year Bitcoin cycle appears to be weakening as institutional investors through ETFs concentrate liquidity in major assets
- Retail investors are focusing on AI, equities, and commodities instead of crypto, attracted by stronger returns in those sectors
- A 2026 crypto recovery depends on ETF expansion beyond Bitcoin and Ether, strong major asset performance, or retail investor return
Retail cryptocurrency traders shifted their investment strategy after the October 2024 market crash, moving away from altcoins and back into Bitcoin and Ether. The change marks a reversal of a pattern that had been in place since 2022.
According to Wintermute’s digital asset OTC market report released Tuesday, retail traders had been net sellers of Bitcoin and Ether since 2022. They preferred altcoins instead during that period.
The October 10 liquidation event changed this trend. Wintermute described it as a “clear inflection point” that accelerated retail’s rotation back into major cryptocurrencies.
Data shows retail investors were actively reducing their exposure to Bitcoin and Ether at the time. However, they quickly pivoted back into these assets after the record leverage flush occurred.
Wintermute stated this shift demonstrates an “immediate defensive posture following the liquidation shock.” Retail traders grew concerned about contagion and a possible bear market.
By the end of 2024, retail positioning had converged with institutional investors. Both groups prioritized liquidity and resilience over riskier altcoin investments.
Altcoin Rally Duration Drops Sharply
The altcoin market struggled throughout 2025 as retail investors maintained their defensive position. The average altcoin rally lasted just 19 days in 2025.
This represents a sharp decline from around 60 days the previous year. Wintermute said the shorter rallies reflect “reduced conviction and more tactical risk-taking” from investors.
Between 2022 and 2024, altcoin rallies typically lasted 45 to 60 days. These rallies were supported by sustained narratives including memecoins and AI tokens.
The median rally length dropped to just 20 days in 2025. Wintermute noted that “narratives continued to emerge, but failed to persist.”
This pattern made altcoin rallies “feel like tactical trades rather than high conviction trends.” The market showed clear signs of exhaustion as rallies quickly faded.
The traditional pattern of liquidity recycling from Bitcoin and Ether into altcoins broke down. Instead, liquidity concentrated in large-cap assets driven by ETFs and institutional inflows.
Market breadth narrowed across the crypto sector. Only a small number of tokens outperformed while most altcoins continued grinding lower.
Institutional Dominance and Retail Competition
The introduction of US spot Bitcoin ETFs tilted digital asset markets toward institutional investors. This shift has fundamentally changed market dynamics and price movement patterns.
Wintermute said the traditional four-year Bitcoin cycle is becoming obsolete. The muted 2025 rally failed to generate the spillover effect into altcoins that characterized previous cycles.
Retail investors face strong competition for their attention outside crypto. In 2025, Bitcoin and Ether lagged traditional equity markets, particularly high-growth sectors like space, AI, robotics, and quantum computing.
Retail investors remain active in markets but are increasingly dollar-cost averaging into the S&P 500. They are also allocating to other high-growth themes beyond cryptocurrency.
LATEST: 📊 Wintermute says Bitcoin's 2026 recovery hinges on three scenarios: ETF mandate expansion beyond BTC and ETH, another major rally creating wealth effects, or retail investors returning from AI and equities. pic.twitter.com/kB9k1hnDnN
— CoinMarketCap (@CoinMarketCap) January 14, 2026
For a 2026 crypto recovery, Wintermute said at least one of three developments must occur. ETFs and digital asset treasury companies need to expand mandates beyond Bitcoin and Ether, major assets must post strong performance, or retail attention must return.
Clear Street managing director Own Lau said renewed retail participation likely depends on Federal Reserve rate cuts. Lower interest rates would create cheaper capital and greater risk appetite.
Markets are currently pricing in roughly two rate cuts in 2026 according to the CME Group’s FedWatch Tool. Total crypto market capitalization reached $3.34 trillion on Wednesday following a $300 billion gain since January 1.
