Crypto market liquidity became uneven in 2025, according to market maker Wintermute. Investor capital concentrated around a small group of tokens, while much of the market struggled to gain traction.
As the crypto market breaks away from previous cycle-driven patterns, the firm identified three key developments it believes could set the stage for a broader market recovery in 2026.
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Crypto Liquidity Turned Top-Heavy in 2025
In its 2025 digital asset OTC market review, Wintermute noted that the year put many of the cryptocurrency market’s long-standing assumptions to the test. It also revealed a broader shift in how liquidity operates across the sector.
Typically, in crypto markets, capital flowed in a cyclical pattern, starting with Bitcoin as the primary entry point for liquidity, then rotating into Ethereum once Bitcoin momentum slows.
It eventually moved into large-cap and later smaller-cap altcoins as risk appetite increased. However, this did not happen in 2025.
The market-making firm found that trading activity in 2025 was heavily concentrated in Bitcoin and Ethereum, alongside a small group of large-cap tokens. As a result, liquidity became increasingly top-heavy, with capital clustering around major assets rather than dispersing across the broader market.
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Changing Liquidity Dynamics in 2025. Source: WintermuteAccording to the report, this shift was driven by exchange-traded funds (ETFs) and digital asset treasuries (DATs). Until recently, stablecoins and direct investments were the primary entry points for capital flowing into the crypto market.
The outcome was a contraction in market breadth and a growing divergence in returns. This suggested a more targeted deployment of capital rather than broad-based market rotation. The trend is evident in the performance of the altcoin and meme coin sectors.
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The report highlighted that rally durations in the altcoin market have shortened significantly compared to previous years. Between 2022 and 2024, altcoin rallies typically persisted for 45 to 60 days.
In contrast, 2025 saw a sharp decline in rally longevity, with median persistence falling to around 20 days. The dip came despite a steady emergence of new metas and themes, including meme coin launchpads, perpetual DEXs, and the x402 narrative.
Wintermute also drew attention to the performance of meme coins in 2025. The report found that the aggregate meme coin market capitalization fell sharply after the first quarter. Furthermore, it was unable to recover key support levels. While brief spikes in activity did occur, they failed to reverse the broader downtrend.
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The report cited short-lived episodes of volatility, such as the competition between meme coin launchpads Pump.fun and LetsBonk in July, as examples of localized trading interest that did not develop into a sustained market recovery.
Wintermute Outlines Three Scenarios for a Broader Market Recovery in 2026
Wintermute emphasized that a reversal of 2025’s dynamics would likely require at least one of three developments:
- Broader institutional exposure: Most new crypto liquidity is entering the market through ETFs and digital asset treasuries, but it remains largely concentrated. A wider market recovery would require “expansion of their investable universe.”
- Renewed strength in major assets: A strong rally in Bitcoin or Ethereum could generate a wealth effect. However, the extent to which capital is rotated into the wider market remains uncertain.
- Return of retail investor attention: A shift in retail mindshare from equities back to crypto could bring new inflows. Still, Wintermute views this as the less likely scenario.
According to the report, outcomes in 2026 will hinge on whether one of these catalysts is strong enough to broaden liquidity beyond large assets.
Source: https://beincrypto.com/crypto-market-revival-2026-wintermute-analysis/
