Retail traders rattled by October’s massive crypto liquidation event rotated back into major cryptocurrencies, abandoning hopes of an altcoin-led rally, according to market maker Wintermute.
Since around 2022, retail investors had been net sellers of Bitcoin and Ether in favor of altcoins, but that long-standing pattern reversed in 2025, Wintermute said in its Digital Asset OTC Market 2025 report released Tuesday.
The Oct. 10 liquidation event and subsequent market crash “marked a clear inflection point,” accelerating retail’s shift back into Bitcoin and Ether, the firm noted.
While data shows retail traders were actively trimming exposure to major cryptocurrencies ahead of the crash, they rapidly pivoted back into Bitcoin and Ether following the record leverage flush.
“This shows the immediate defensive posture following the liquidation shock and growing concerns of contagion and an imminent bear market.”
Wintermute reported that by the end of the year, retail positioning had converged with institutional, “prioritizing liquidity and resilience over peripheral risk.”
Altcoin rallies lacked conviction
The rotation back into major cryptocurrencies effectively sidelined any altcoin season this cycle, with altcoins “materially underperforming” in 2025, according to Wintermute.
While new narratives continued to surface, they failed to gain lasting traction. “Narratives continued to emerge, but failed to persist,” the report said.
Altcoin rallies in 2025 lasted an average of just 19 days, down sharply from roughly 60 days the previous year, reflecting weaker conviction and more tactical, short-term risk-taking, Wintermute noted. The firm described a market “showing clear signs of exhaustion,” where rallies quickly faded.
By contrast, from 2022 to 2024, altcoin rallies typically stretched between 45 and 60 days, supported by sustained themes such as memecoins and artificial intelligence. In 2025, however, the median rally length fell to just 20 days.
“This led to altcoin rallies feeling like tactical trades rather than high conviction trends.”
October crash fears ease
Although altcoins have yet to regain meaningful momentum heading into 2026, fears surrounding October’s market crash have begun to fade, helping restore investor confidence.
Earlier this month, Bitwise Chief Investment Officer Matt Hougan said the recent rally reflects a shift in sentiment, noting that “investors have put October 10 in the rearview mirror.”
Total crypto market capitalization has climbed to its highest level of the year, rising 10%, or roughly $300 billion, since Jan. 1 to reach $3.34 trillion on Wednesday, according to CoinGecko.
