The cryptocurrency halo fades, and retail investors are turning to the stock market one after another

Once the most reliable fuel for the crypto market, retail investors are collectively withdrawing.

On March 2nd, Bloomberg reported that market maker Wintermute cited a recent report based on JPMorgan data, stating that since the end of 2024, retail funds have been continuously shifting into the stock market, a trend that accelerated significantly after the crypto market crash in October last year. Bitcoin’s price has nearly halved from its all-time high of about $126,000, currently trading around $66,000, while stock indices continue to rise.

This structural shift directly undermines the demand foundation of the crypto market. Unlike the stock market, which is supported by corporate profits, dividends, and institutional allocations, crypto assets have long relied heavily on retail speculation as the main demand driver. Evgeny Gaevoy, CEO of Wintermute, stated that cryptocurrencies are now just “one of many risk assets with similar volatility characteristics,” no longer holding a unique position.

Fund Flow Data Confirms the Shift

Fund flow data clearly illustrates the scale of this migration. According to Bloomberg’s compilation, over the past three months, spot Bitcoin ETFs experienced nearly $3 billion in net outflows, although some trading days recently saw small inflows.

Notably, the October crypto market crash was the direct trigger for this retail exodus. According to Coinglass data, the crash liquidated over 1.6 million traders, wiping out more than $19 billion in positions, with over $7 billion disappearing in less than an hour.

Wintermute’s report pointed out that after the crash, retail funds showed an “almost complete shift to the stock market,” and this trend continues to this day.

This marks a clear break from previous investment cycles—where stocks and digital assets often moved in tandem as risk-on bets, with retail investors showing no obvious preference between the two markets.

Meanwhile, stock funds continue to attract capital, and thematic ETFs are also popular—taking gold-themed ETFs as an example, which attracted over $20 billion in funds during the same period. Cosmo Jiang, portfolio manager at Pantera Capital, noted that retail speculation is now spreading to a broader range of thematic trades.

“Monthly ETF data shows inflows into gold, silver, quantum computing, and other thematic ETFs, while Bitcoin and Ethereum ETFs saw outflows during the same period,” he said. “This directly indicates that a significant portion of speculative retail attention and momentum has rotated into other thematic trades.”

Reduced Volatility Advantage, Declining Crypto Appeal

One of the core attractions of cryptocurrencies for retail investors has been their high volatility—far exceeding that of traditional assets—and this advantage is now diminishing.

According to Wintermute data, the realized volatility ratio of Bitcoin relative to Nasdaq has been declining, dropping below 2x in the first half of 2025. For ordinary traders chasing excess returns, the volatility gap between crypto and stocks is narrowing, weakening the unique appeal of crypto assets.

Wintermute summarized this phenomenon on social media as: “The surge in retail activity in the stock market is draining the air from the crypto market.”

At the same time, Wintermute also pointed to a deeper structural change: retail investors are increasingly feeling they have an analytical edge in the stock market, largely thanks to the proliferation of AI tools—making profit analysis and stock screening more accessible.

However, this “information advantage” is hard to replicate in the crypto market. Crypto assets lack a universally accepted valuation framework, and the expanding universe of investable tokens makes individual investors less confident in making “informed decisions.” This cognitive gap further accelerates retail exits.

Risk Warning and Disclaimer

Market risks are inherent; investment should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein are suitable for their particular circumstances. Invest at your own risk.