Wintermute OTC data shows crypto liquidity clustered in BTC and ETH as broader altcoin rallies faded in 2025

Crypto’s liquidity stopped spreading out in 2025, and the domino effects cascaded throughout the rest of the market, according to a new report from market maker Wintermute.

Wintermute said crypto’s market structure shifted last year, with liquidity concentrating into bitcoin, ether, and a small set of large-cap tokens rather than dispersing widely across altcoins. The change in capital flows has resulted in a break from prior cycle playbooks, the firm noted.

“Capital no longer spreads broadly across the market,” Wintermute wrote in its 2025 digital asset OTC report, which uses the firm’s proprietary over-the-counter flow as its primary lens.

Capital rotation from BTC and ETH into other majors. Image: Wintermute.

Instead, liquidity has become “more concentrated and unevenly distributed,” with large volumes confined to fewer tokens and performance increasingly driven by where capital enters the market and how it is deployed. The market maker pointed to exchange-traded funds and digital asset treasury companies — which it said have expanded and increasingly directed flows into major tokens — as a key reason spot activity has clustered at the top.

Median altcoin rally shortened to just 19 days

Additionally, the memecoin cycle “collapsed” early in the year, further narrowing capital formation and limiting the durability of rallies outside the largest names, according to the company.

Wintermute said the result has been a market where altcoin rallies have become shorter and more selective, with opportunistic bursts of activity around themes such as memecoin launchpads, perpetual DEXs, and emerging payment and API primitives, but with “limited follow-through.”

In its report, Wintermute stated the median altcoin narrative rally lasted roughly 19 days in 2025, down from about 61 days the prior year.

The report also described a change in how large counterparties executed. Per the firm’s analysis, institutional participants have shown less directional conviction and more tactical positioning around headlines. At the same time, execution has become more deliberate and recurring, reflecting growing sophistication and a shift away from simple seasonal trading cycles like “Uptober.”

Seasonal crypto trading patterns declined in 2025 compared to prior years. Image: Wintermute.

On derivatives, Wintermute said off-exchange structures have broadened. It pointed to increased use of CFDs as a capital-efficient way to access a wider set of underlyings. Also, options have matured into a core portfolio tool, with more systematic strategies and yield-generation approaches replacing the more one-way, directional positioning that dominated earlier cycles, it said.

Importantly, the report’s central theme was that liquidity pathways now matter as much as overall risk sentiment.

Wintermute said capital has increasingly flowed through structured channels such as ETFs and digital asset treasury companies, shaping where depth builds and where trading remains viable at size. That has supported majors while limiting spillover into the long tail of tokens, contributing to a more range-bound environment for most of the market.

A separate institutional analysis from Finery Markets echoed parts of that shift, arguing that off-exchange execution has taken on a larger role as institutions prioritize execution quality and settlement safety.

Looking to 2026, Wintermute said 2025 may mark the beginning of crypto’s transition away from clean, narrative-driven cycles, with future performance depending on whether liquidity broadens beyond a handful of large-cap assets or remains constrained to the top of the market.

For that trend to reverse, in Wintermute’s opinion, corporate buyers active through ETFs and digital asset treasuries must “widen their mandate” to include more assets.

Major assets must also log significant performance, which could result in capital rotation across the broader crypto market, it said. Finally, a substantial return of retail investor appetite could usher in new money and spur stablecoin mints. However, Wintermute argued that this scenario is less likely to happen.

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