Wintermute Says Crypto’s Bull Cycle Is Over

What Happened

Cryptocurrency’s traditional four-year cycle has collapsed, replaced by a new market structure where liquidity concentration and investor positioning now determine price action, according to a comprehensive year-end analysis from leading OTC desk Wintermute.

Trump’s tariff announcement on April 2 further pressured markets, concentrating activity early in the year before broad softening through spring and summer.

Themes including memecoin launchpads, perpetual DEXs, and the x402 meta sparked brief activity bursts but failed to develop into durable market-wide rallies, largely due to choppy macro conditions and market fatigue after 2024’s excesses.

Both institutional and retail investors rotated back into majors by year-end following the October 10 deleveraging event that triggered roughly $19 billion in liquidations over 24 hours.

Market Context

The firm’s proprietary trading data reveals that 2025 marked a fundamental shift in how digital assets trade, with the year’s muted performance indicating crypto’s transition from speculation-driven rallies to a more institutionally anchored asset class.

Exchange-traded funds and digital asset treasury companies evolved into what the firm describes as “walled gardens,” providing sustained demand for large-cap assets without naturally rotating capital into the broader market.

With retail interest diverted toward equities, 2025 became a year of extreme concentration where a handful of major tokens absorbed the vast majority of new capital while the rest of the market struggled.

Trading activity in 2025 followed a distinctly different pattern than previous years, breaking what had felt like seasonal rhythms.

Markets became increasingly choppy as macro forces took control, with flows turning reactive and episodic around headlines without sustained momentum.

Despite modest price activity, institutional counterparties showed staying power through 2025.

Altcoin open interest also collapsed by 55%, from around $70 billion to $30 billion by mid-December, as forced unwinding flushed out excess leverage concentrated outside Bitcoin and Ethereum.

Wintermute identifies three scenarios that would need to materialize for market breadth to recover beyond large-cap concentration.

Why It Matters

Early-year optimism around the pro-crypto U.S. administration quickly disappointed as risk sentiment deteriorated sharply through the first quarter when memecoin and AI-agent narratives faded.

The firm’s derivatives data also reveals options activity more than doubled year-over-year, with systematic yield and risk management strategies dominating flow for the first time rather than one-off directional bets.

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Details

Wintermute’s OTC flow data shows the historic pattern of Bitcoin gains recycling into Ethereum, then blue chips, and finally altcoins has weakened dramatically.

Traditional Seasonality Shattered by Structural Shifts

The late-year pickup seen in 2023 and 2024 failed to materialize, shattering narratives around “Uptober“ and year-end rallies.

Wintermute’s data reveals these were never true seasonal patterns but rather rallies driven by idiosyncratic catalysts like ETF approvals in 2023 and the new U.S. administration in 2024.

Altcoin rallies shortened dramatically, averaging roughly 19 days in 2025, down from 61 days the prior year.

Institutional Engagement Deepens Despite Muted Returns

Wintermute saw 23% year-over-year growth among institutional participants, including crypto-native funds, asset managers, and traditional financial institutions.

Engagement deepened materially, with activity becoming more sustained and focused on deliberate execution rather than exploratory positioning.

By the fourth quarter, options notional reached 3.8 times first-quarter levels, while trade counts doubled, indicating sustained growth across both ticket size and frequency.