Retail investors, once the most reliable fuel for the crypto market, are collectively withdrawing.
On March 2, Bloomberg reported that market maker Wintermute cited a recent report from JP Morgan, stating that since the end of 2024, retail funds have been continuously shifting to the stock market, a trend that has significantly accelerated since the crypto market crash in October last year. The price of Bitcoin has nearly halved from its historical high of about $126,000 and is currently trading around $66,000, while stock indices continue to rise.
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This structural shift has directly shaken the foundational demand for the crypto market. Unlike the stock market, which is supported by corporate earnings, dividends, and institutional allocation needs, crypto assets have long relied heavily on the speculative enthusiasm of retail investors as their main demand driver. Wintermute CEO Evgeny Gaevoy stated that cryptocurrencies have now become &#34;one of many risk assets with similar volatility characteristics,&#34; no longer enjoying a unique status.
<h2>Fund Flow Data Confirms the Shift Trend</h2>
Fund flow data clearly illustrates the scale of this migration. According to data compiled by Bloomberg, in the past three months, the spot Bitcoin ETF has experienced nearly $3 billion in net outflows, despite some minor inflows on certain trading days recently.
Notably, the crypto market crash in October last year was the direct trigger for this mass exodus of retail investors. According to Coinglass data, the crash liquidated over 1.6 million traders, evaporating positions worth over $19 billion, with more than $7 billion disappearing in less than an hour.
The Wintermute report pointed out that after the crash, retail funds showed a trend of &#34;almost completely turning to the stock market,&#34; and this trend continues to this day.
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This marks a clear break from previous investment cycles—during past cycles, stocks and digital assets often moved in sync as dual bets on risk appetite, with retail investors showing no significant preference between the two markets.
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Meanwhile, stock funds continue to attract capital, and thematic ETFs are also in high demand—taking gold-themed ETFs as an example, they attracted over $20 billion during the same period. Pantera Capital portfolio manager Cosmo Jiang noted that the speculative attention of retail investors is spreading to broader thematic trades.
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&#34;From the monthly ETF data, we can see inflows into gold, silver, quantum computing, and other thematic ETFs, while Bitcoin and Ethereum ETFs have seen outflows during the same period,&#34; he said, &#34;this directly indicates that a considerable amount of speculative retail attention and momentum has rotated to other thematic trades.&#34;
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<h2>Volatility Advantage Narrows, Crypto Attractiveness Declines</h2>
One of the core attractions of cryptocurrencies for retail investors is their high volatility, which far exceeds that of traditional assets—and this advantage is fading.
According to Wintermute data, the realized volatility ratio of Bitcoin relative to the Nasdaq has been continuously declining, briefly falling below 2 times in the first half of 2025
For ordinary traders chasing excess returns, the volatility gap between cryptocurrencies and stocks is narrowing, diminishing the unique appeal of crypto assets.
Wintermute summarized this phenomenon in a social media post: &#34;The surge in retail activity in the stock market is sucking the air out of the crypto market.&#34;
At the same time, Wintermute pointed out a deeper structural change: Retail investors increasingly feel they have an analytical advantage in the stock market, largely due to the proliferation of AI tools—profit analysis and stock screening have become more accessible.
However, this sense of &#34;information advantage&#34; is difficult to replicate in the crypto market. The lack of a recognized valuation framework for crypto assets, along with the continuous expansion of investable targets, makes it challenging for individual investors to build confidence in making &#34;informed decisions.&#34; This cognitive gap further accelerates the exit of retail investors

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Affected by the cryptocurrency market crash last October, retail funds are rapidly withdrawing from the crypto market and fully shifting towards stocks and thematic ETFs. The core reason lies in the narrowing advantage of high volatility in crypto assets and the lack of a recognized valuation framework; at the same time, the popularity of AI tools has given retail investors a greater analytical advantage in the profit-supported stock market

- Retail investors, once a reliable source of fuel for the cryptocurrency market, are collectively withdrawing.  
- A Bloomberg report indicates that since late 2024, retail funds have increasingly shifted towards the stock market, exacerbated by the October 2022 crypto market crash, with Bitcoin's price nearly halving.  
- This structural shift diminishes the demand foundation of crypto assets, as retail speculation has historically driven their value, while stocks are supported by corporate profits and institutional investments.

The halo of cryptocurrency fades, and retail investors turn to the stock market