A new report from major crypto market maker Wintermute reveals a profound structural shift in the cryptocurrency market, with liquidity increasingly concentrating in Bitcoin (BTC) and Ethereum (ETH) at the expense of broader altcoin rallies. The firm's 2025 Digital Asset OTC Report, based on its proprietary over-the-counter flow data, indicates capital is no longer spreading broadly across the market but has become "more concentrated and unevenly distributed."
The report highlights that the median altcoin narrative rally lasted just 19 days in 2025, a dramatic drop from approximately 61 days in the prior year. This shortening of rallies is linked to the early collapse of the memecoin cycle in 2025, which narrowed capital formation and limited the durability of moves outside the largest tokens. Wintermute attributes the clustering of spot activity at the top of the market to the expanding influence of exchange-traded funds (ETFs) and digital asset treasury companies, which increasingly direct flows into major tokens.
Institutional behavior has also evolved, with participants showing "less directional conviction and more tactical positioning around headlines." Execution has become more deliberate and recurring, reflecting growing sophistication and a move away from simple seasonal trading cycles like "Uptober," which declined in prominence in 2025.
The derivatives market saw broadening off-exchange structures, with increased use of Contracts for Difference (CFDs) as a capital-efficient access tool and options maturing into a core portfolio instrument. More systematic strategies and yield-generation approaches are replacing the one-way directional positioning of earlier cycles.
The central theme of the report is that liquidity pathways now matter as much as overall risk sentiment. Capital flowing through structured channels like ETFs and digital asset treasuries shapes where market depth builds, supporting major assets while limiting spillover into the long tail of tokens. This has contributed to a more range-bound environment for most of the market.
Looking ahead to 2026, Wintermute suggests 2025 may mark the beginning of crypto's transition away from clean, narrative-driven cycles. For the trend to reverse and liquidity to broaden, corporate buyers active through ETFs and digital asset treasuries would need to "widen their mandate" to include more assets, major assets would need to log significant performance to trigger capital rotation, or a substantial return of retail investor appetite would be required—a scenario Wintermute views as less likely.
