The halo of cryptocurrencies has faded, and retail investors are flocking to the stock market.
Retail investors, once the most reliable fuel for the crypto market, are collectively exiting.
On March 2, according to Bloomberg, market maker Wintermute cited JPMorgan data in a latest report stating that since the end of 2024, retail funds have been continuously shifting to the stock market, a trend that has accelerated significantly since the crypto market crash in October last year. The price of Bitcoin is nearly halved compared to its historical high of around $126,000, currently trading near $66,000, while stock indices continue to rise.
This structural shift has directly shaken the foundation of demand in the crypto market. Unlike the stock market, which is supported by corporate profits, dividends, and institutional allocation needs, crypto assets have long relied heavily on retail investors’ speculative enthusiasm as their main demand driver. Wintermute CEO Evgeny Gaevoy said, cryptocurrencies have now become "just one of many risk assets with similar volatility characteristics" and no longer enjoy a unique status.
Fund flow data confirms the migration trend
Fund flow data clearly shows the scale of this migration. According to Bloomberg compiled data, over the past three months, spot Bitcoin ETFs have seen nearly $3 billion in net outflows, despite some small inflows on certain recent trading days.
It is worth noting that the crypto market crash in October last year was the direct catalyst for this large migration of retail investors. According to Coinglass data, this crash liquidated more than 1.6 million traders, evaporating positions exceeding $19 billion, more than $7 billion of which disappeared in less than an hour.
Wintermute's report points 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—in past cycles, stocks and digital assets often moved in tandem as dual bets on risk appetite, with retail investors not showing obvious preference between the two markets.
Meanwhile, stock funds continue to attract money, and thematic ETFs are also popular—for example, gold-themed ETFs attracted more than $20 billion in funds during the same period. Cosmo Jiang, portfolio manager at Pantera Capital, pointed out that retail speculative attention is spreading to broader thematic trades.
"Monthly ETF data shows inflows towards gold, silver, quantum computing, and other thematic ETFs, while Bitcoin and Ethereum ETFs experienced outflows over the same period," he said. "This directly indicates that a significant portion of speculative retail attention and momentum has shifted to other thematic trades."
Narrowing volatility advantage reduces crypto appeal
One of the core appeals of crypto to retail investors lies in its much higher volatility compared to traditional assets—but this advantage is fading.
According to Wintermute data, the ratio of Bitcoin's realized volatility to Nasdaq's has been steadily declining, dropping below twice in the first half of 2025. For ordinary traders seeking excess returns, the volatility gap between crypto and stocks is narrowing, weakening the unique attraction of crypto assets.
Wintermute summarized this phenomenon on its social media: “The surge in retail activity in the stock market is sucking the air out of the crypto market.”
At the same time, Wintermute also points out a deeper structural change: Retail investors increasingly feel they have an analytical advantage in the stock market, largely thanks to the proliferation of AI tools—profit analysis and stock screening are now more accessible.
However, this "sense of informational advantage" is difficult to replicate in the crypto market. Crypto assets lack recognized valuation frameworks and the available investment targets continue to expand, making it difficult for individual investors to confidently make "informed decisions." This perception gap further accelerates retail investors’ departure.
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