Institutional HODLing Splits Crypto Market in Two

CEX spot trading volume has experienced a notable decline, reflecting broader shifts in investor behavior and market dynamics within the cryptocurrency sector. According to The Block, centralized exchanges (CEX) recorded a 27% drop in spot trading volume in June 2025, falling to $1.07 trillion from $1.47 trillion in May, marking the lowest level in nine months. This decline underscores the evolving structure of the crypto market, where Bitcoin’s stability contrasts sharply with the underperformance of altcoins and the reduced participation of retail investors.

Bitcoin, often seen as a "digital gold" due to its relatively low volatility and widespread institutional acceptance, has maintained a dominant position in the market. On-chain data reveals that Bitcoin accounted for approximately 55% of CEX trading volume in June 2025, a figure that has remained relatively stable over recent months. This dominance is further reinforced by sustained institutional accumulation, particularly through spot ETFs and corporate balance sheet allocations. Notably, companies like MicroStrategy have continued to increase their Bitcoin holdings via bond financing, while net inflows into Bitcoin ETFs have provided additional price support.

The altcoin market, in contrast, has faced significant challenges. Leading tokens such as Ethereum (ETH), Solana (SOL), and Cardano (ADA) have seen their prices fall nearly 40% from their respective peaks. On-chain data also indicates a decline in activity on the Ethereum network, with fewer active addresses and reduced transaction volumes observed in June. Analysts attribute this underperformance to the high volatility and speculative nature of altcoins, as well as a lack of compelling narratives or technological catalysts to drive renewed interest.

Retail investors, who historically played a key role in driving trading activity, have also shown reduced engagement in the altcoin space. This decline in participation may stem from lingering caution following the market turmoil of 2021-2022, during which many retail investors incurred significant losses. The complexity of altcoin investments, particularly in areas like DeFi and NFTs, further acts as a barrier to entry for novice investors. In contrast, Bitcoin’s simplicity and widespread recognition have made it more accessible, contributing to its continued appeal.

The decline in CEX spot trading volume is also linked to a broader shift in trading patterns. Whereas short-term speculation and leveraged trading once dominated CEX activity, spot trading has gained prominence in June 2025. This shift is attributed to the long-term investment strategies of institutional players, who prefer to hold rather than trade frequently. Furthermore, decentralized exchanges (DEXs) have not seen a corresponding increase in trading volumes, suggesting a broader contraction in market liquidity. This liquidity crunch could further suppress altcoin trading activity, as these tokens rely heavily on active ecosystems for price discovery and depth.

Presto Research analyst Min Jung highlighted the growing divide between institutional and retail investors, noting that the altcoin market is struggling due to subdued retail participation, while Bitcoin is being primarily supported by institutional buying. This dynamic suggests that the market is transitioning toward a more mature phase, where institutional strategies are increasingly replacing short-term retail speculation. The continued inflow of capital into Bitcoin through ETFs and corporate adoption has solidified its position as a stable asset, whereas altcoins face challenges in regaining momentum without similar institutional support or clear narratives to attract retail interest.

Looking ahead, the market may see Bitcoin’s dominance continue in the short term, supported by its safe-haven appeal and institutional inflows. However, for altcoins to recover, they will need to introduce new technological advancements or compelling use cases, such as upgrades to Ethereum or emerging applications in areas like Web3. Additionally, restoring retail participation through simplified investment tools and educational resources could be key to revitalizing the altcoin market. Broader liquidity restoration across both CEX and DEX platforms will also be essential for long-term development, as current liquidity constraints may hinder price discovery and market depth.

The decline in CEX trading volume in June 2025 signals a structural shift in the cryptocurrency market, with Bitcoin gaining a stronger foothold and altcoins struggling to regain traction. Investors and market participants will need to closely monitor on-chain data, trading volume trends, and the evolving roles of institutional and retail players to navigate this changing landscape effectively.