Crypto Market Splits Institutional Bitcoin Focus from Retail Altcoin Shift

The crypto market is experiencing a bifurcation, with institutional investors focusing on Bitcoin and Ethereum, while retail investors are increasingly turning to alternative coins and memecoins. This trend is highlighted in a mid-year report by a crypto trading firm, which notes that institutional players are anchoring themselves in Bitcoin and Ethereum, while retail investors are pouring into altcoins and memecoins.

According to the report, institutional trading volumes with the two largest tokens, Bitcoin and Ethereum, held steady at 67%, likely backed by ETF inflows and structured accumulation vehicles. In contrast, retail investors have reduced their exposure to Bitcoin and Ethereum from 46% to 37%, shifting their capital toward newer, more speculative tokens. This divergence is seen as a sign of a more mature, sophisticated, and specialized crypto market, where investors are no longer chasing the same trends. Institutions are treating crypto as a macro asset, while retail traders continue to gravitate toward innovation.

Traditional finance firms were the fastest-growing cohort in over-the-counter trading volumes, with a 32% year-over-year growth. This growth is fueled by regulatory developments, which have given larger firms more confidence to participate in the market. Retail brokers also saw strong activity, with a 21% rise in volume over the same period. Meanwhile, crypto-native firms dialed back, with a 5% decrease in volume.

Options volume in the over-the-counter market jumped 412% compared to the first half of 2024, as institutions embraced derivatives for hedging and yield generation. Contracts for Difference (CFDs) doubled in variety, offering access to less liquid tokens in a more capital-efficient way. The firm noted that memecoin activity has become more fragmented, with the number of tokens traded by individual users doubling, signaling a broadening appetite for micro-cap assets in the long tail of the market.

Legacy names like Dogecoin and Shiba Inu have lost ground to a growing list of niche tokens such as Bonk, Dogwifhat, and Popcat. Looking ahead to the second half of 2025, analysts predict that spot Dogecoin ETF filings could significantly impact the retail market and set a precedent for other alternative assets. The final regulatory decision on these filings is expected by October.