Retail Traders Rotated Back to Bitcoin and Ether After October Crash, Wintermute Says

Retail crypto traders retreated to Bitcoin and Ether following the sharp market crash and liquidation cascade in October 2025, abandoning riskier altcoins and reinforcing a defensive shift that weighed on the broader altcoin market throughout the year, according to a new report from Wintermute.In its Digital Asset OTC Market 2025 report released Tuesday, Wintermute said the Oct. 10 liquidation event marked a clear inflection point in retail behavior, accelerating a rotation back into large-cap cryptocurrencies after years of favoring smaller tokens.October crash triggered retail flight to majorsSince around 2022, retail traders had generally been net sellers of major cryptocurrencies, preferring to chase higher-beta returns in altcoins. That pattern broke decisively in 2025, Wintermute said.Following the October crash — one of the largest leverage flushes of the cycle — retail investors quickly pivoted back into Bitcoin and Ether, prioritizing liquidity and perceived safety.“This shows the immediate defensive posture following the liquidation shock and growing concerns of contagion and an imminent bear market,” Wintermute wrote.By year-end, retail positioning had largely converged with institutional behavior, with both cohorts emphasizing capital preservation and resilience over speculative exposure.Altcoin season failed to materializeThe rotation into majors effectively prevented a sustained altcoin season in 2025. While narratives continued to emerge, they failed to persist or attract durable capital, the report said.Altcoins “materially underperformed” during the year, with rallies becoming shorter and more tactical:Average altcoin rally duration in 2025: ~19 daysAverage duration in 2024: ~60 daysMedian rally length in 2025: ~20 daysFrom 2022 to 2024, altcoin rallies often lasted 45–60 days, supported by longer-lived themes such as memecoins and artificial intelligence. In contrast, 2025 rallies faded quickly, reflecting reduced conviction and faster profit-taking.“This led to altcoin rallies feeling like tactical trades rather than high-conviction trends,” Wintermute noted, describing a market showing “clear signs of exhaustion.”Panic fading, but momentum still limitedAlthough altcoins have yet to regain strong momentum entering 2026, Wintermute said panic linked to the October crash has gradually subsided, helping restore some investor confidence.Earlier this month, Matt Hougan, chief investment officer at Bitwise, said the market’s early-year rebound reflected investors moving past the shock of the October liquidation.“One of the reasons I think we’ve rallied to start this year is that investors have put October 10 in the rearview,” Hougan said.Market cap rebounds, but risk appetite remains selectiveTotal crypto market capitalization has climbed to its highest level so far in 2026, rising about 10% — roughly $300 billion — since Jan. 1, to reach $3.34 trillion, according to CoinGecko data.Still, Wintermute’s analysis suggests that risk appetite remains selective, with capital favoring large, liquid assets over peripheral tokens. Whether that balance shifts back toward altcoins will likely depend on sustained macro stability, renewed on-chain activity, and a return of higher-conviction narratives.Retail traders’ retreat into Bitcoin and Ether after the October crash reshaped market dynamics in 2025, leaving altcoins without the sustained momentum needed for a true season — a trend that has yet to fully reverse heading into 2026.