Retail investors have begun allocating between cryptocurrency and equities rather than buying both simultaneously, according to new analysis from crypto market maker Wintermute.
The divergence, which began in late 2024, has reached its widest point in recent history.
What the Data Shows
Wintermute combined its proprietary retail crypto flow data with JP Morgan's retail equity inflow data to map the relationship between the two asset classes.
Between 2022 and late 2024, retail treated both as companion risk-on outlets, buying into them in tandem. That rolling correlation has since turned negative - retail is now rotating between the two, not into both.
Three developments accelerated this in 2025: memecoins and AI agent tokens briefly captured retail attention when equity markets stagnated; retail aggressively bought equity dips around April's tariff shock; and a near-complete pivot into stocks has persisted since October 10.
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Why It Matters
Wintermute draws a clear causal line: heightened equity market activity is draining capital from crypto, not the reverse.
The firm said equity-driven retail engagement creates identifiable windows when cryptocurrency can attract more sustained bids - a metric crypto investors should monitor.
Crypto's compressing volatility profile is central to the dynamic. The BTC/NDX volatility ratio fell below 2x in the first half of 2025, a historic low.
Volatility was a primary draw for retail entering crypto. As that edge narrows, equities absorb the same speculative impulse.
The Structural Backdrop
Two forces reinforce the trend. Seamless on/off ramps across fintech platforms now allow capital to exit crypto without friction; in earlier cycles, onboarding friction kept deployed capital recycling within the token ecosystem.
AI-powered analysis tools have also given retail a perceived edge in equities, where consensus valuation frameworks exist. Cryptocurrency lacks equivalent standards, weakening retail's confidence in positioning there.
At a $2.3 trillion market cap - roughly 40% below its all-time high - moving crypto prices now requires substantially greater flows than five years ago.
Wintermute concluded that cryptocurrency retains a place in retail portfolios, but as one speculation vehicle among many, not the primary one.
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