Is the era of competing coins "rising together" coming to an end? Study: Funds are fiercely holding onto Bitcoin and Ethereum

In 2025, the “trickle-down effect” in the cryptocurrency market was declared ineffective. According to the latest report released by market maker Wintermute, the previous chain reaction of “Bitcoin eating the meat, competing coins drinking the soup” has become history, replaced by highly concentrated capital and a fundamental shift in market structure. Wintermute analyzed the company’s extensive OTC data and found that the structure of the cryptocurrency market changed last year, with liquidity concentrated in Bitcoin, Ethereum, and a few other large-cap cryptocurrencies, rather than being widely dispersed across various competing coins as before. The company pointed out that the change in capital flow has broken the market’s previous cyclical patterns.

In the “2025 Digital Asset OTC Report,” Wintermute stated: “Funds are no longer broadly dispersed across the entire market.” Average duration of competing coin rallies drops to 19 days The report revealed a chilling statistic for retail investors: in 2025, the average duration of rallies in competing coins sharply decreased to 19 days. In comparison, in 2024, this figure was 61 days. Wintermute noted that with the meme coin cycle collapsing rapidly at the beginning of the year, further compressing the market’s capital formation space, it became difficult for trends outside mainstream coins to last. Wintermute stated that as a result, the rallies of competing coins became shorter and more selective. Although there are occasional short-term bursts around specific themes, such as meme coin issuance platforms, perpetual DEXs, and emerging payment protocols and API infrastructure, these trends tend to “come quickly and go just as fast,” lacking follow-up capital support. Who strangled liquidity? The main reason for this widening “wealth gap” is the change in the channels through which capital enters the market. Wintermute analyzed that the current market momentum is primarily driven by ETFs and digital asset reserve companies (such as Strategy, BitMine, and other enterprises that include cryptocurrencies on their balance sheets). These institutionalized capital channels are highly selective, precisely locking large liquidity into top-tier assets, making it difficult for funds to spill over into competing coins. This is also supported by data from another institution, Finery Markets: institutional investors now prioritize execution quality and settlement security, thus favoring “flow” within regulated structured channels rather than “surfing” in higher-risk competing coin markets. The report also observed a significant shift in the operational strategies of large investors. Wintermute analyzed that institutions are now reducing directional bets and instead focusing more on tactical positioning aligned with news events. Meanwhile, trading execution has become more cautious and repetitive, reflecting traders’ increasingly mature strategies and their gradual departure from seasonal trading cycles such as “Uptober.” In terms of derivative financial products, Wintermute pointed out that OTC derivatives structures continue to expand. Among them, Contracts for Difference (CFDs) are favored for their high capital efficiency; options are gradually evolving from speculative tools to core portfolio management and yield strategies; and the market is leaning more toward systematic strategies and income-generating methods rather than “one-way bets on market rises or falls.” Outlook for 2026: The only solution to break the deadlock Looking ahead to 2026, Wintermute believes that 2025 marked the end of the wild era where cryptocurrencies could “fly on narratives.” Future market performance will depend on whether liquidity can break the current deadlock. To reverse the “strong get stronger, weak get weaker” situation, Wintermute proposed two possible scenarios, with the former being more likely and the latter highly unlikely: