Wintermute releases the 2025 Cryptocurrency OTC Market Analysis Report, revealing a fundamental shift in market liquidity mechanisms: capital is no longer widely dispersed, trading activity is concentrated in a few large tokens, the duration of altcoin rallies has shortened, and the market is transitioning from narrative-driven cyclical fluctuations to a more structurally constrained, execution-led mechanism. This article is based on a piece authored by Wintermute, compiled, translated, and written by Odaily Planet Daily.
(Background note: Perhaps at the start of 2026, the crypto market was already orchestrated by Wintermute)
(Additional context: Wintermute founder discusses “11/11 Crash” and market outlook)

Table of Contents

• Executive Summary
• Part 1: Spot
  • Trading Volume Growth: Cyclical patterns replaced by short-term volatility
  • Counterparties: Institutional foundations deepening
  • Token Landscape: Leading markets becoming more diversified
• Analysis of Spot Capital Flows Across Token Types
  • Mainstream Coins: Funds gradually returning at year-end
  • Altcoins: Shorter rally durations
  • Meme Coins: Narrowing active scope
• Part 2: Derivatives
  • CFDs: Underlying asset range expanding
  • Options: Increasing strategic complexity
• Part 3: Liquidity
  • Retail Attention: Cryptocurrencies no longer the “first choice” risk assets
  • Liquidity Channels: ETFs and DAT becoming new pathways
• 2026 Market Outlook: Bidding farewell to pure cyclical models
  • Three possible paths for 2026

Editor’s note: On January 13, Wintermute published an analysis report on the 2025 OTC crypto market. As the industry’s top market maker, Wintermute is highly sensitive to liquidity trends. In this 28-page report, the firm reviews liquidity changes in the 2025 crypto market and concludes—the market is shifting from clear, narrative-driven cyclical fluctuations to a more structurally constrained, execution-led mechanism. Based on this, Wintermute also pre-sets three key scenarios for the market’s recovery in 2026.

Below is the original Wintermute report content, compiled and organized by Odaily Planet Daily. ( Some content has been omitted ).

Executive Summary

2025 marks a fundamental transformation in the liquidity mechanism of the crypto market. Capital is no longer broadly dispersed across the entire market; liquidity has become more concentrated and unevenly distributed, leading to increased divergence between returns and market activity. As a result, a large portion of trading volume is confined to a few tokens. The duration of bullish runs has shortened, and price performance now depends more on liquidity entry channels and deployment methods than in previous years.

This report summarizes the main changes in liquidity and trading dynamics observed by Wintermute in 2025:

· Trading activity is concentrated in a few large tokens. BTC, ETH, and select altcoins dominate most trading activity. This reflects the expansion of ETF and digital asset treasury products (DAT) into a broader altcoin range, and the fading of the Meme coin cycle at the start of 2025.

· The decline of narrative confidence accelerates, and altcoin rallies double in speed. Investors no longer follow narratives with sustained conviction but instead engage in opportunistic trading around themes like Meme platform launches, perpetual contract platforms, emerging payment solutions, and API infrastructure (such as x402), with limited follow-up.

· As professional counterparties gain influence, execution becomes more cautious. This manifests as more prudent cyclical trading (breaking the four-year fixed cycle), broader use of leverage OTC products, and diversification of options as core asset allocation tools.

· Capital inflow methods are equally important as the overall liquidity environment. Increasingly, capital enters via structured channels like ETF and DAT, affecting liquidity flow and final accumulation zones in the market.

This report mainly interprets these market developments based on Wintermute’s proprietary OTC data. As one of the industry’s largest OTC platforms, Wintermute provides liquidity services across regions, products, and diverse counterparties, offering a unique and comprehensive off-chain crypto OTC perspective. Price trends reflect market outcomes, while OTC activity reveals how risks are deployed, how participant behavior evolves, and which parts of the market remain active. From this perspective, the market structure and liquidity dynamics in 2025 have significantly shifted compared to early cycles.

Part 1: Spot

Wintermute’s OTC data shows that, in 2025, trading activity has shifted from being purely volume-driven to a more mature, strategic environment. Trading volume continues to grow, but execution is more planned; OTC trading is increasingly favored for its bulk trading capacity, privacy, and controllability.

Market positioning has also transitioned from simple directional trades to more customized execution strategies, with broader use of derivatives and structured products. This indicates that market participants are becoming more experienced and disciplined.

In Wintermute’s spot OTC activity, these structural shifts are mainly reflected in three aspects:

· Volume growth: OTC trading volume continues to increase, highlighting persistent demand for off-chain liquidity and efficient bulk execution (while limiting market impact).

· Counterparty growth: The range of participants further expands, driven by factors such as venture capital funds shifting from private allocations to liquidity markets; enterprises and institutions executing large trades OTC; and individual investors seeking alternatives outside centralized and decentralized exchanges.

· Token landscape: The overall active token universe has expanded beyond BTC and ETH, with funds flowing into a broader range of altcoins via DAT and ETF. Despite this, data shows that after the massive liquidation on October 11, 2025, both institutional and retail investors refocused on major tokens. Altcoin rallies are shorter and more selective, reflecting the waning Meme coin cycle and increased liquidity and risk capital selectivity, leading to a contraction in market breadth.

Next, Wintermute will provide further detailed analysis of these three aspects.

Volume growth: Cyclical patterns replaced by short-term volatility

“The characteristic of the 2025 market is oscillation, with price fluctuations mainly driven by short-term trends rather than longer-term seasonal patterns.”

Wintermute’s OTC data shows that, in 2025, trading activity exhibits a distinct seasonal pattern, markedly different from previous years. Optimism around the new pro-crypto US administration quickly dissipates; as Meme and AI narrative-driven momentum cools at quarter-end, risk sentiment deteriorates sharply by the end of Q1. On April 2, 2025, Trump’s announcement of tariffs and other negative headlines further pressure the market.

Consequently, market activity in 2025 is concentrated in the first half of the year, with strong early-year performance followed by weakness in spring and early summer. The year-end rebound patterns seen in 2023 and 2024 did not recur, breaking the seemingly established seasonal pattern—often reinforced by narratives like “October rally.” In reality, this is never a true seasonal pattern but rather driven by specific catalysts such as ETF approvals in 2023 and the new US government in 2024.

After entering Q1 2025, the bullish momentum from Q4 2024 remained incomplete. Market volatility increased, and macro factors dominated price direction, with price movements more akin to short-term fluctuations rather than sustained trends.

In short, capital flows became passive and intermittent, with pulses around macro headlines but no sustained momentum. In this oscillating environment, as market liquidity thins and execution certainty becomes more critical, OTC trading remains the preferred execution method.

Counterparties: Institutional foundations deepening

“Despite flat price trends in 2025, institutional counterparties are already rooted.”

Wintermute observed strong growth across most counterparty types, with the largest increases among institutional and retail brokers. In the institutional category, traditional financial institutions and corporates grew modestly but with significantly deeper engagement—activity became more sustained and focused on cautious execution strategies.

Although 2025’s market performance was subdued, institutions are evidently established here. Compared to more tentative and scattered participation last year, 2025 features deeper integration, larger trading volumes, and more frequent activity—positive signals for the industry’s long-term future.

Token landscape: Leading markets becoming more diversified

“Trading volume increasingly flows into large tokens beyond BTC and ETH, driven jointly by DAT and ETF.”

In 2025, total token trading remained relatively stable. However, based on 30-day rolling data, Wintermute averaged trading around 160 different tokens, up from 133 in 2024. This indicates OTC activity has expanded into a broader and more stable token universe.

A key difference from 2024 is that: the speculative cycle driving token activity has weakened in 2025—token diversity remains relatively stable throughout the year, rather than surging around specific themes or narratives.

Since 2023, Wintermute’s total nominal trading volume has become increasingly diversified, with other segments surpassing the combined volume of BTC and ETH. While BTC and ETH still constitute a significant part of trading flow, their share has declined from 54% in 2023 to 49% in 2025.

Notably, where is this capital flowing?—Although long-tail tokens’ share continues to decline, blue-chip assets (top 10 by market cap, excluding BTC, ETH, wrapped assets, and stablecoins) have increased their share of total nominal volume by 8 percentage points over the past two years.

Despite some capital and retail focus on large-cap tokens this year, volume growth is also driven by ETF and DAT expanding into mainstream assets beyond the core. DAT has been authorized to invest in these assets, and ETFs are broadening their scope, including launching staking ETFs (such as SOL) and index funds.

These investment tools continue to favor OTC trading (OTC) rather than exchange trading, especially when the required liquidity cannot be provided on trading platforms.

Analysis of Spot Capital Flows Across Token Types

Mainstream Coins: Funds gradually returning at year-end

“By the end of 2025, both institutional and retail investors are reallocating into mainstream coins, indicating expectations of a rebound before altcoin recovery.”

As altcoin narratives fade and macro uncertainties re-emerge in early 2025, funds are reallocated into BTC and ETH. Wintermute’s OTC liquidity data shows that since Q2 2025, institutional investors have maintained an overweight position in mainstream coins; retail investors, however, shifted into altcoins in Q2 and Q3, hoping for a market rebound. After the deleveraging event on October 11, they quickly reverted to major tokens.

The shift toward mainstream coins is driven by market fatigue, as “alt season” has yet to truly start. This trend was initially led by institutions (long-term net buyers of mainstream coins), but by year-end, retail investors also became net buyers.

This positioning aligns with the current market consensus: BTC (and ETH) need to lead the market first for risk appetite to return to altcoins. Retail investors increasingly agree with this stance.

Altcoins: Shorter rally durations

“In 2025, the average duration of altcoin narrative-driven rallies was about 19 days, significantly shorter than 61 days in the previous year, indicating market fatigue after last year’s overextension.”

Altcoins performed poorly overall in 2025, with substantial declines in annual returns and no meaningful sustained recovery apart from brief rebounds. While certain themes attracted attention temporarily, they struggled to gather momentum or translate into broader market participation. From a capital flow perspective, this is not due to a lack of narratives but rather market exhaustion—rallies are repeatedly tested and quickly fade due to lack of conviction.

To understand this dynamic, we go beyond price action and focus on sustainability analysis. Here, “sustainability” is defined as the duration that altcoins maintain participation levels above recent normal levels in OTC flows. In practice, sustainability indicators measure whether a rally can attract continued follow-up or whether market activity dissipates after initial volatility. This perspective helps distinguish between sustained altcoin trends and episodic, rotational bursts that do not evolve into broad trends.

The chart above shows a clear shift in altcoin rallies. From 2022 to 2024, altcoin rallies typically lasted about 45 to 60 days, with 2024 being a strong year for BTC, driving wealth rotation into altcoins and maintaining narrative momentum around Meme and AI themes. In 2025, despite emerging new narratives like Meme platform launches, Perp DEX, and x402 concepts, the median duration of sustained rallies plummeted to about 20 days.

While these narratives can trigger short-term market activity, they fail to develop into lasting, market-wide bullish trends. This reflects macro volatility, market fatigue after last year’s overextension, and insufficient liquidity in altcoins to sustain narrative breakthroughs beyond initial phases. As a result, altcoin rallies become more tactical trades rather than high-confidence trend moves.

Meme Coins: Narrowing active scope

“After peaking in Q1 2025, Meme coins failed to recover, as trading became more dispersed and narrowed, unable to regain support.”

Meme coins, as the most crowded segment, entered 2025 with dense issuance, persistent bullish sentiment, and narrative-driven price action. However, this state abruptly ended. Unlike other higher-beta sectors, Meme coins turned downward earlier and more decisively, never regaining upward momentum.

Despite sharp price retracements, the absolute number of OTC Meme coin trades remained healthy at all times. Even at year-end 2025, monthly traded tokens stayed around 20, indicating trading interest persisted. The change lies in activity patterns: in practice, counterparties involved in Meme coin OTC trades each month significantly reduced the number of tokens traded, focusing activity on specific tokens rather than broad Meme coin trading.

Part 2: Derivatives

Wintermute’s OTC derivatives data shows strong growth, driven by increased market volatility and large trades. OTC derivatives have become the preferred venue for executing complex, capital-efficient structured products, offering price certainty and privacy.

CFDs: Underlying asset range expanding

“In 2025, the underlying assets for CFDs further expanded, with futures increasingly favored as a capital-efficient way to gain market exposure.”

The number of tokens used as underlying assets for OTC CFDs doubled year-over-year, from 15 in Q4 2024 to 46 in Q4 2025. This sustained growth reflects the market’s adaptation to using CFDs to access a broader range of assets (including long-tail tokens) in a capital-efficient manner.

The rising demand for CFDs indicates a market shift toward obtaining capital-efficient exposure via futures. Perpetual open interest grew from $120 billion at the start of the year to $245 billion in October, then sharply declined after the October 11 liquidation event, reflecting a significant risk-off shift.

Options: Increasing strategic complexity

“As systematic strategies and yield generation become main drivers of trading volume, the options market is rapidly maturing.”

Building on the previous activity in CFDs and futures, Wintermute’s OTC data shows that counterparties are increasingly turning to options to construct more customized and complex crypto asset exposures.

This shift has driven a rapid increase in options activity: from Q4 2024 to Q4 2025, nominal trading volume and number of trades grew approximately 2.5 times year-over-year. This is mainly due to more counterparties—especially crypto funds and digital asset treasuries—adopting options strategies to generate passive income.

The chart below tracks quarterly OTC options activity relative to Q1 2025, clearly illustrating the upward trend throughout the year. By Q4, nominal volume reached 3.8 times Q1 levels, and trade counts 2.1 times, indicating continued growth in trade size and frequency.

Part of the nominal volume growth stems from the rise of systematic options strategies, involving holding and rolling positions over time. This marks a significant shift from previous years, when options were mainly used for directional bets.

To understand the evolution of options capital flows, we further examine BTC (which still accounts for a large share of nominal trading volume in 2025). The chart below shows quarterly distributions of long and short calls and puts.

The composition of BTC options flows in 2025 reveals a clear shift: from a focus on bullish call buying to a more balanced use of calls and puts, with activity increasingly centered on yield generation and structured, repeatable strategies. Yield strategies have become more common, with investors selling puts and covered calls to earn income, increasing stable options supply and suppressing volatility. Meanwhile, as BTC failed to break previous highs, demand for downside protection remained strong, with put buyers continuing to dominate. Overall, the market is more focused on earning yields and managing risks rather than betting on further upside.

The decline in naked long calls further confirms that options are used less for directional bullish exposure and more for systematic strategies. These dynamics collectively indicate that, compared to previous years, the options market in 2025 is becoming more mature and user base more professional.

Part 3: Liquidity

Cryptocurrencies have historically been a channel for excess risk appetite. Due to weak valuation anchors, embedded leverage, and high dependence on marginal capital flows, crypto prices are extremely sensitive to changes in the global financial environment. When liquidity is loose, risk tolerance rises, and capital naturally flows into crypto; when conditions tighten, the lack of structural buy-side becomes apparent. Therefore, crypto has always—and will continue to—fundamentally rely on global liquidity.

In 2025, macroeconomic conditions are the key drivers of crypto prices. Although the current environment features easing interest rates, improved liquidity, and economic strength—factors typically supporting risk assets—crypto performance remains weak. We believe this disconnect stems from two main reasons: retail attention and new liquidity channels.

Retail Attention: Cryptocurrencies are no longer the “first choice” risk assets

“By the end of 2025, crypto has lost its status as the top risk asset for retail investors.”

Despite increased institutional participation, retail remains the backbone of the crypto market. The poor performance in 2025 is mainly due to dispersed retail attention and a waning rotation effect of crypto as the preferred risk asset.

Among many factors, two stand out: technological advances lowering entry barriers, making other investment opportunities (especially in AI and related fields) more accessible, offering similar risk profiles, narratives, and returns, thus diverting attention from crypto. Simultaneously, we are witnessing a normalization after 2024—initial retail surge into Meme coins, followed by a late-year shift into AI themes. Market enthusiasm returning to normal is inevitable.

Therefore, retail investors now prefer stock themes like AI, robotics, and quantum tech, while BTC, ETH, and most altcoins lag behind as risk assets. Crypto is no longer the default outlet for excess risk-taking.

Liquidity Channels: ETFs and DAT as new pathways

“Today, ETFs and DAT, together with stablecoins, have become prominent channels driving capital into crypto markets.”

BTC and ETH prices dipped slightly, but the most relative weakness appeared in the altcoin sector. Besides waning retail participation, a key factor is the shift in liquidity and capital entry methods.

Until two years ago, stablecoins and direct investments remained the main channels for capital inflows into crypto. Now, ETFs and DAT structurally alter the pathways of liquidity injection into the ecosystem.

Earlier this year, we categorized crypto liquidity into three core pillars: stablecoins, ETFs, and DAT. They form the main channels for capital inflow.

· Stablecoins remain a key entry point: they are still crucial for settlement and collateral, but now mainly share the role of capital entry rather than leading it.

· ETFs direct liquidity toward the top two assets: inflows are constrained by investment scope, strengthening the depth and resilience of major assets but with limited spillover effects beyond BTC and ETH.

· DAT introduces stable, non-cyclical demand: treasury allocations further reinforce concentration in major assets, absorbing liquidity without naturally expanding risk appetite.

Liquidity is not solely flowing through ETFs and DAT, but these channels have become increasingly important. As mentioned earlier, their investment scope is expanding, allowing exposure beyond BTC and ETH, mainly into other blue-chip tokens. However, this process is gradual, and benefits for altcoins will take time to materialize.

In 2025, crypto is no longer driven by broad market cycles. Instead, rallies are limited to a few assets with concentrated liquidity, while most of the market underperforms. Looking ahead to 2026, market performance will depend on whether liquidity disperses across more tokens or continues to concentrate in a few large ones.

2026 Market Outlook: Bidding farewell to pure cyclical models

“The 2025 market failed to deliver the expected rally, but this may mark the beginning of crypto’s transition from a speculative asset to a mature asset class.”

The 2025 market performance demonstrates that the traditional four-year cycle is gradually losing validity. Our observations suggest that market behavior is no longer dominated by a self-fulfilling four-year narrative but instead depends on liquidity flows and investor focus.

Historically, crypto-native wealth has been like a single, interchangeable capital pool, with Bitcoin’s gains naturally spilling over into major coins and then into altcoins. Wintermute’s OTC data shows this transmission effect has weakened significantly. New capital tools—especially ETFs and DAT—have evolved into a “closed ecosystem.” While they sustain demand for a few blue-chip assets, capital does not naturally rotate into a broader market. With retail interest shifting heavily toward stocks and prediction markets, 2025 has become an extremely concentrated year—most new capital flows into a handful of mainstream assets, while the rest of the market struggles to sustain continuous growth.

Three possible paths for 2026

2025 was a year of significant narrowing of market breadth. As mentioned, the average altcoin rally duration shrank from about 60 days last year to around 20 days. Only a few selected tokens performed outstandingly, while the broader market continued to decline under selling pressure.

To reverse this trend, at least one of the following conditions must occur:

· Expansion of ETF and DAT investment scope: Currently, most new liquidity remains within institutional channels like ETF and DAT. Broader market recovery requires these institutions to expand their investable universe. Signs are emerging—more ETF applications for SOL and XRP are being submitted.

· Leading tokens drive the rally: Like in 2024, if Bitcoin (and/or ETH) can rally strongly, they may generate wealth effects and spill over into a broader market. But how much capital will ultimately flow back into digital assets remains uncertain.

· Market attention returns: A less likely scenario is retail focus shifting back from equities (including AI, rare earths, and other themes) into crypto, bringing new capital inflows and stablecoin issuance.

The market’s 2026 trajectory will depend on whether at least one of these catalysts effectively promotes liquidity dispersion beyond a few major assets. Otherwise, market concentration will persist.